RBS: big losses, big bailout
Royal Bank of Scotland has not only announced the biggest loss in British corporate history - but it's also being shored up in what some will see as Britain's biggest ever bailout.
The Treasury has announced that we as taxpayers will provide insurance to Royal Bank against future losses on £325bn of loans and investments.
First losses of up to £19.5bn on those impaired assets will be taken by Royal Bank.
But to prevent the losses wrecking the bank, we as taxpayers will be injecting up to £19bn of new capital into it, in the form of non-voting shares.
Also, losses greater than £19.5bn will be born by us - by taxpayers. In a prolonged severe recession, those losses could be substantial.
What we're getting in return is a £6.5bn fee - in the form of yet more of these non-voting shares.
And RBS has given a legally binding commitment to increase lending by £25bn in 2009.
We already own 70% of Royal Bank - and that stake could rise to a maximum of 75% after today's deal with the Treasury.
So it matters that Royal Bank becomes a profitable bank again.
Its new chief executive, Stephen Hester, announced RBS would be reducing its running costs by more than £2.5bn a year.
I put to him on the Today Programme that this would lead to job losses around the world of more than 20,000. His non-denial was that job cuts would be substantial.
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Or to put it another way, in rebuilding this pillar of our economy there'll be pain for employees and possibly for taxpayers.
UPDATE, 11:56AM: Here are a few additional thoughts about the mother of all banking bailouts.
First, the total injection of capital by shareholders - that's including the £20bn we subscribed in October - looks set to hit £39bn.
That's a colossal amount of our money at risk - although in theory we could make a profit on it in a few years if Stephen Hester were to succeed in mending RBS and in flogging our shares back to the market (but to state the bloomin' obvious, the value of shares can go down as well as up).
It is of course reassuring for us as taxpayers that Royal Bank's share price has risen very sharply this morning, as we own 70% of the ordinary shares (and, as I've explained, that stake could rise to 75%).
But there's probably a ceiling through which the existing ordinary shares will struggle to break for some years, because of the pre-emptive rights over dividends of the new B shares that are being issued to the Treasury (to taxpayers).
As for the potential hit that could be taken by taxpayers on the massive insurance policy we've written, that's anyone's guess.
If there were - say - losses of 10% on the insured loans and assets, our share of that loss would be just under £12bn. Or rather more than the £6.5bn fee we're being paid.
So let's hope the rescue of Royal Bank - and the similar underpinning of Lloyds that's expected tomorrow - has the virtuous consequence of limiting the depth of the recession and thus feeds back to the banks in a positive way, in the form of reduced losses on loans.
And since we're on to Lloyds, it would be wrong to assume that the Treasury will insure its loans on identical terms to those provided to Royal Bank.
My understanding is that the government views the corporate loan book that Lloyds acquired when it bought HBOS as more poisonous than most of the assets it has insured at Royal Bank.
Which means that Lloyds may well have to pay more to taxpayers - to you and me - for the life-preserving protection we're giving it on around £300bn of ill-judged loans.
I'm 
© MMX~RS~q~RS~~RS~z~RS~52~RS~)
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I hope the government stops messing about and just nationalises the thing. RBS is a proverbial dead horse!
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Ooooooo so insurance of potential losses of up to £325Bn and an injection of £19Bn and they agree to lend back to us £25Bn?
Well got to fund those £650,000 per year pensions from 50 somehow.
And it is no good saying "well it is in his contract and it was voted by the shareholders" well, let the shareholders who voted in this insane benefits package pick up the tab.
This is the guy that made the decision to buy ABN which is by far the overall chunk of the losses.
Won't reward failure I think someone said.
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You have got to hand it to Goodwin he is the textbook on how to look after number one, he must be laughing at everyone.
Pay yourself loads whilst the going is good then when it all goes wrong and the business is literally going bust the next day (and you would loose your mighty pension) get the Government to guarentee the gross pension you awarded yourself when times were much better.
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The FSA always had the power to reduce, if not eliminate, the excesses that led to this - by making the capital-adequacy requirements steeper for risky business activities. Just as they are going to do now, belatedly, several years after the horse has bolted.
And now it's in the open as to why they didn't do this before, as you & Nick Mason reported yesterday. It was political guidance from Blair and Brown.
May we hope that this time the chickens have truly come home to roost ?
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It's a real pity you didn't ask Hester about the real situation relating to Deripaska and the Russian mafia: it appears to be almost exactly the same size as the loss announced. Instead of shooting at 6.4 billion, you shot at the obvious crowd-pleaser of 6.4 million, and still quite predictably missed by a country mile.
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It just gets sillier and sillier, doesn't it?
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Well it was all expected. we knew what was coming,
I fail to understand what RBS was doing when they were supposed to be Banking.....it certainly was not looking after our money nor our shares, and because they chose to get themselves into this much trouble we the taxpayers have to bail them out, we should have let them go bankrupt, then allowed another company to come in and purchase there assets at a knock down price and take them over, pay off 100000 staff and restart the RBS as a BANK, instead of the disgraceful sham it is today.
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Robert
Can you put the lie to the so called 'insurance' scheme.
'Insurance' is about shared risk -- any pay out is supposed to be funded from the premiums collected.
Premiums have to cover the expected pay out.
Where are the premiums coming from to cover these Banks losses?
If they are coming from the Banks, then they are no better off!!
If the payout comes from the taxpayer, then is isn't insurance, it is a gift - not even a loan, investment or anything like that - it is a gift.
Please don't give it the dignity of the moniker 'insurance', it is no such thing.
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"RBS is a proverbial dead horse!"
The market obviously doesn't think so RBS shares are up 20% already this morning.
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One other item announced by RBS today:
Nathan Bostock joins RBS from Abbey, where he was Chief Financial Officer for the last 3 years. He was previously in their Treasury, and before that, RBS' Director of Group Risk Management, Treasury and Capital Markets. It was a direct result of the weaknesses left in the system during that period that RBS managed to dig the hole it's in today, to quote from his Abbey CV: "During his years with RBS, Nathan was responsible for re-designing the Group's risk management strategy and the integration of the capital markets business from the sale of Charterhouse Bank."
Hester is hereby renamed Brother Fester.
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Well,the fateful day is upon us.What a scandal.RBS is allowed to dump 325billion into a "park and ride"scheme that nigh on guarantees they will not be accountable for almost 95% of these suspect toxic assets.Just what are these assets ??? How can they have been allowed to get in it so high ? Presumably they didn't just occurr overnight.Clearly RBS got way too big for its boots........with personal ambition taking precedence over common business sense.Blame FG for a fair proportion of this but equally blame Sub-Prime Minister Brown for leading us down this dark tunnel.He,as tenant of the Chancellory and Sub PM will go down in history as the most damaging person in the UK's economic history.
And still RBS claws cash from the taxpayer........it's not over yet.Apparently they are going to lend 25billion of our own money back to us-Great News.
We should have allowed RBS to rot in its own stinking pile of debt-As it is every man,jack will feel the pain of this for years to come.GB you are a disgrace.You should resign.
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I would recommend refusing to pay Fred Goodwin's £650,000/year pension and let's seen if he dares to take the bank to court.
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Presumably this is not a unique case. but just the "industry standard".
How many more of the former "masters of the universe" and other bankers have made such arrangements?
It is too easy to assume Goodwin is just a one-off exceptional mixture of incompetence and avarice. The problem is systemic so, come on, Robert, dig out the facts: how widespread are the pension pots that run into many millions? How many of Goodwin's ilk are already drawing such penions and how many more, at the taxpayers' expense, are in line to do so?
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Robert,
At what point will someone in the media ask Gordon Brown to do the honourable thing by taking responsibility for the mess(The architect of the FSA). He is clearly out of his depth and should resign immediately. We need a Govt of national emergency of "all the talents" to get us through this.
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let the plebians
eat the losses
they're suckers
more cake sir fred?
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The real damage is that this revelation will further alienate and anger the great British public, especially as it was left to the media to tell us about it. Our present batch of so called leaders are way out their depth as demonstrated by their pathetic attempts to conceal embarrassing information rather than face up to it decisively. Far be it from me to praise dear Maggie, but she had more balls than any other leader since Churchill and if she were in charge at the present time she would definitely not be sitting in a corner wringing her hands and whimpering, trying to keep the lid on things. They’ll never get us through this until they realise the importance of getting the electorate on their side and, at the present time, that is obviously regarded as an irrelevance.
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So as I see it.You run a bank,get too big for your boots-all unregulated.You lend vast amounts of money that you don't have into dodgy assets-unregulated.You then lose 24billion whilst parking a further 325billion of toxicity in the lap of the taxpayer,raise more cash from the taxpayer and then start lending this back to the taxpayer-all with the blessing of Sub PM Brown.Oh,and by the way-somewhere along the line-your CEO gets knighted and "rewarded"with a 650k/year pension.It all makes sense now.....of course,I should have understood this is how UK plc is run these days.Silly me.
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Robert,
I can remember at the time of the collapse of Enron and WorldCom, smug comments from the City about "Oh this could never happen here! The non-executive directors of a British company would prevent someone like Ken Lay or Bernie Ebbers becoming too dominant in the firm!" Well doesn't RBS show up how stupid those statements were?! OK there's is a difference in that we're not talking about fraudulent behaviour but again a single person was allowed to go unchecked and unquestioned in a firm. Fred the Shred used to hold sessions which RBS staff called "Morning Prayers" at which he would berate executive who he felt were underperforming. He was clearly just a bully who got drunk on his own self-importance. What did RBS's non-execs do to curtail him? Why didn't they object to the folly of the ABN-Amro deal? The guy who was on 5 Live with you this morning said that RBS had some serious city players on it's board but they were either cowed or awed by The Shred and left him unchecked. Isn't one of the lessons of this debacle that the whole system of corporate governance needs to be overhauled so as to prevent a single person becoming so dominant?
As regarding his obscene pension, well why didn't the government address this when they required The Shred to step down? Or where they too busy worrying about Glenrothes?
We have a right to the answers Robert!
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Re Number 16
A Government of all the talents. Only one problem. I can't think of any M P that falls within that category.
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Were where the Auditors in all this ??? Too busy enjoying the tax free jollys to F1 in Monaco !
Losses on this scale cannot have gone undetected to any of the Directors. Regulators or Auditors and there must be an investigation as to why these cover ups have been allowed
The fruad squad should now become involved. This is unacceptable and cannot now be brushed under the table.
Lets hear from the Auditors NOW
Brown must go NOW
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Re Goodwin's good win : any help from the taxpayer should have been conditional on the directors being sacked with no pay or pension. All this "contractual obligations" stuff is just rubbish - firms go broke every day leaving creditors in the lurch, and pension funds go bust too.
In any case I can't see why the taxpayers should bail out the banks. Depositors should have been protected (e.g. by transferring these accounts to National Savings) but I do not see why all these "credit default swaps" and other casino operations should be guaranteed - banks are limited liability companies after all.
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Has anyone read this pathetic analogy on the government real help now website ?
Quote:
Just like everything gets difficult for you in your house when the electricity stops flowing, everything gets difficult in the economy when the banking system stops working. So it was really important to save banks, because that underpins everything, just like electricity does in your house.
For the record (and this part is specifically for the government), the difference between saving electricity and saving banks is one of criminal discrimination. Everybody would benefit equally from the former.
Only bankers, big business, politicians and criminals benefit from the later. Workers and "prudent" savers are being unfairly discriminated against. Well ?
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By bailing out the banks twice (and maybe now a third time on the horizon) the government has firmly wedged itself between a rock and a hard place.
They are now too comitted financially to let bailed banks fail, but still can't see the extent of the liabilities in them, so basically giving the banks a blank cheque, that will probably run to several trillion pounds.
My advice would be to do what they should have done at the start: let the banks fail as businesses, but guarantee savers deposits.
Its also a sensible (if brave) option now: if we can't see the extent of the bailed banks losses, then we need to consider turning off the money tap. In the long run it may save us a lot of money.
One thing: no-one has yet asked the question: How can a business as relatively small as RBS run up liabilities that dwarf the GDP of medium-sized nations, let alone small ones?
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This mess is the result of a bad business decision; where was the due diligence?
Bad business decisions should result in the business failing, we should not be bailing out this business with taxpayers money.
Freds pension was agreed by the shareholders - dominated by institutional holders with a vested interest in talking up remuneration packages. I'm sure Freds pension is contractually watertight; however is there not a case for him to answer for bad corportate governance?
Neglecting to undertake rigorous due diligence is negligent and there must be a clause in his contract about acting in the best interests etc....
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Refund the savers, take ownership of the loans and get the money back, make mortgage defaulters council houses, close all insolvent banks.
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In other words Gordon, "Look what a mess you have landed us in now".
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Robert
I don't think we are being told the whole truth.
We are being told that there is £300bn going into the banking insurance scheme. I think that is not right as we are also being told that RBS was the largest bank in the world.
ARE WE REALLY TO BELIEVE THAT ALL THAT DEBT IS DENOMINATED IN STERLING, OR IS IT IN RESERVE CURRENECIES SUCH AS EUROS AND DOLLARS? WE SHOULD BE TOLD.
If it is the latter we have been saddled with a debt that is unquantifiable in sterling and dependent on the exchange rate. Take a look at the problems of Eastern Europe where their currencies have gone down the drain and loans have been given in Euros. Austrian and German Banks are in deep dodo as a consequence.
Answer on a postcard please (or better still on this blog); don't believe anything that this government says. AD actually tried to say on the Today programme that we would make a profit out of Northern Wreck, that is currently being subjected to the "Grand Old Duke of York" economic theory.
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Robert,
what exactly was the 'cause' of this loss, in detailed terms?
we never know the detail. is it a secret?
when money is 'lost' on paper (accounts) is it 'share value', asset value or is it that it was 'spent' on something that didn't actually exist (fraud), was it 'stolen' or 'misappropriated by 'hackers' or 'scams'?
was it dropped down the drain or were the 50quid bills burnt along with the evidence?
the money (whatever form it takes) must have gone somewhere. Nigerian criminal gangs? oil companies milking? UBS style trading mistakes, illegal betting?
come on, just like Enron, we need the detail it is after all OUR (that is ME AND YOU) money that is now the 'foundations' for this bank and I WANT TO KNOW NOW, please (of course)!
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thinking of a master plan
there is nothing but sweat
inside my hand so i dig into
the rhymes i've lent
thinking about how i could become
the president
in 1999 rbs bought mercury
asset managements investment
bank because the rbs investment
computer system was rubbish
in 2001 they sold it
to bank of new york
after transferring clients
because they were jolly good fellows
and bought nat west instead
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I've recently been made redundant. Forgive me if i ask "What's the point in ever going back to work after all this?" I begrudge where all my taxes will be going now, and it's been exposed how corrupt this country and many others are.
It's time for a revolution. Watch this space! I'm at breaking point.
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Some comparisons are neededed.
£19.5bn = £325 per person in the UK.
£325bn = £5416 per person in the UK.
Over the last 10 years how much did RBS pay in ...
(1) taxes?
(2) dividends?
(3) bonuses?
(4) bonuses and salaries to executives and senior managers?
(5) fees and commissions for various "deals"?
Laws should be made that put a legal limit on how much a company can receive from the taxpayer in loans (must be securitised) and guarantees. This should be limited to 5% of the corporation tax paid over the last 3 years.
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The RBS team surely deserve a bonus from their shareholders for this deal.
First loss is kept to 6% and that doesn't matter anyway since HMG will inject money to cover that loss in any case in return for more worthless pieces of paper.
In return for giving them a blank cheque plus 19bn petty cash we get 6.5bn back in worthless pieces of paper. Does this value the bank at 130bn?? really? How much did the 70% stake cost us?
Why carry on the farce of this with RBS - it is just throwing money in the trough and everytime the markets are emptying it just as fast.
How many weeks before the next refilling is required?
No surprise that the markets like this from the movement in shares this morning - it is complete capitulation by the government to the banks. The is no limit to the stupidity of the lending they can make which HMG will not bailout now and in future since banks cannot be allowed to fail.
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Wait, if WE are injecting THEIR loss provisions, then we are assuming ALL losses. What?!
What value could we get if we just broke them up and sold off all the pieces?
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On the RBS accoutns themselves:
1. Rahere particularly enjoyed the way Sir Philip Hampton turned a disaster into a plus: "The international
nature of the Group is reflected by the fact that during 2008 we were able to benefit from liquidity support provided
by central banks in a number of jurisdictions." That reveals something interesting, RBS is being bailed out elsewhere as well. One trusts we have a full picture of the dilution, Sir Philip?
2. Regarding Fester's refusal to act against the Shred, Sir Philip states: "In recognition of the crisis in global financial services and the unprecedented losses incurred by the RBS Group in 2008, the Remuneration Committee of the Board has been working to bring about fundamental change to the way remuneration works throughout the Group. There is an obvious need for very significant change to compensation policies and practice across the industry and we intend that RBS will be fully engaged in the necessary process of change." That makes the accounts fraudulent.
3. To expand on my previous posting about Nathan Detroit, Hester affirms that the tso divisions which generated these losses included the one he subverted. In fact, the losses from risk exposures were not 6.4bn, but 16.6bn if you add back their trading profitability, nearly triple the face value.
4. Can anyone explain the following from Hester's statement: "The fall in
sterling exchange rates inflates the optics of our international balance sheet." The WHAT? Viewed through the bottom of a glass, perhaps?
5. In terms of timescale, Hester considers the problems will continue for 3-5 years before they even begin to turn the corner. I bet GB's happy with that statement.
6. He does, however, confirm the creation of a Toxic Bank division in the second quarter.
I will next turn to the accounts themselves.
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What will probably be one of the hardest things to do with RBS (not just the bank but the whole group of companies) will be to change the culture inside it.
Just because Fred has gone, does not mean that his influence and example has gone too.
Hester and colleagues (and the FSA, the Treasury and UKFI) will have their work cut out to get RBS operating with a reasonable degree of social responsibility as opposed to Fred's reckless and imprudent ways.
Eliminating the bad and inappropriate influences and preventing the emergence of a "son of Fred" / "Fred II" regime, will not be easy.
Instilling within the operational culture the right qualities will be hard work.
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In your interview with Stephen Hester on the Today programme this morning he was quite quick to acknowledge there would be job cuts. I don't think that question needed to be asked - we knew the answer already.
It would have been more pertinent to ask Stephen Hester if he was going to reduce the pay and pension entitlements of RBS senior executives and directors as part of the cost reduction programme.
That is the question most people would like an answer to.
I know Stephen Hester is not responsible for the mess, he is there to clear it up. But is he really a new broom, or more of the same?
You are there to find these things out for us, Robert. Keep up the good work.
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So responsibility for RBS future losses has been passed to the public, at the rate of about 10,000 pounds per taxpayer. (Let's not dignify this disgrace by calling it insurance.)
I have yet to see a convincing argument as to why letting RBS go bust is worse than the alternatives. I can see that big job losses in Scotland might be fatal to the Labour party, but the government is supposed to be acting in everyone's interests. Frankly, I'd rather take the small hit on my pension fund from letting RBS collapse than have to set aside 10,000 pounds to cover its losses.
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I always think Jim Rogers was right, should just let these rubbish high ego banks failed.
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Tragically.............It's all an unbelievable mess that you and I will bear the burden of for years.The vast amounts of toxicity still remainsunquantified and unidentified.You think you've heard the last of this ? I fear not..........there are plenty more skeletons lurking out there-make no mistake about that.
Stll GB/AD can cope admirably can't they ?
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#13 and others
I suggest RBS shareholders club together and sue Sir Fred for negligence and neglect of duty citing the current state of RBS as prima facie evidence. They could recoup their costs by selling the Sun exclusive rights to report on the public pilloring. It would make good television too. The FSA people yesterday was reality television at its best - jaw dropping as Robert said.
I am still not quite sure where this will end. When there are 4 million people out of work and deeply in debt and greedy incompetent bankers enjoying well paid retirement benefits at 50 there is considerable potential for civil unrest. Debt keeps most of us quietly enslaved for life (or at least from University to retirement). The more radical might consider anarchy a liberation from debt. When you have nothing to lose the shackles get looser.
I think I will pop along to Nat West and see how much I can borrow. With low interest rates and the tax payer taking the risk it is a much better time to borrow than to save. With quantitative easment they probably have loads of fresh cash to hand out. It might finance a nice life in South America.
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The sooner they Nationalise the RBS and rename it the "The Royal Bank of England" the better.
That way the 80% of Tax-payers who are English and will own the Bank will have at least some reason to care for this former Scottish loss-making outfit which otherwise should have been allowed to simply fail as a bankrupt operation in the truest sense of the word!
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There's an old saying often linked with financial gratification and that is 'No gain, no pain'. So far it seems that the bankers have had all the gain and we taxpayers have had all the pain. Isn't it time some financial pain was dished out to the incompetent bankers who have caused all this mess?
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I'm beginning to wonder if the "cure" is as corrupt as the system that caused the original problem ?
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This is a pig of a business. You wouldn't lend to it if you were RBS.
Not knowing the size of potential losses... was there any risk management processes in place at all, or was it just window dressing to placate the FSA.
Big up Sir Fred though...he may not have been able to pick a good deal / time to buy another bank but his personnal contact is a work of genious.
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Does Mr Tom Scholar live up to his name? I suppose he really does !
But Mr Peston you do not make any reference to the Brilliant and Hardwonking Treasury Team who must have toiled and toiled to produce this Master Plan for RBS.
Now Credit is really due. A kind word or two from you would boost morale at HMT. Would it not Sir ?
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Why doesn't the Government just go ahead and nationalise the banks - is it because there would then be no one else to blame when that didn't work?
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How about creating the toxic bank and making it the legal entity responsible for Freds pension and the investment banking arms bonus ?
Seems to me like you get rid of two problems in one go and a big crowd pleaser as well.
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My God, will the government PLEASE let these banks die.
Guarantee the foreign debts to stand behind the pound, guarantee the deposit-holders and then send the lot HOME. They are losing money faster than Merv can print it.
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There use to be a time when the best cure for a patients ills was considered to be bloodletting or leaches when bear bating was a little harmless fun and 20 lashes in the market place considered to be appropriate correction for stealing an apple.
Today we would consider these actions the misgivings of ill educated ignorant and barbaric people with misplaced good intentions more to be pitied for the poor and fearful lives they lead than blamed for their unenlightened minds.
In years to come peoples will look back on us but I feel with less pity and more blame we have the knowledge we no that we cannot continue to run social economic policy on maintain a global economy and a 6billion and rising population on the systems that we had to look after empire building and national communities.
More importantly our ancestors had no facts and little data to work on half the magistrates and doctors could not even read or write (don’t say no change there then). Today we have data and statistics coming out of our ears possibly to much to manage but we know that the social economic community polices we follow are not working just like the blood letting did not but on the bases that we have not discovered anything else we continue to let blood because occasionally some lucky so and so recovers
We know that certain things systems an policies have failed we know that extremes favour the few surely it has to be time to start working on the way we build a new sustainable society economically socially politically. We have the skills we have the knowledge we need to build for our future generations we have to stop the idea that our greed will take care of our offspring because it will not.
Problem is the control of our destiny lies with the greedy fat cats and their supporters and they have no interest in changing anything and so much have we gotten use to this reverence of greed that many secretly admire those prowling fat cats and just wish we were clever enough to steer a business into ruin to bring a global economy to its knees to put hundreds of our fellow citizens out of work and at the age of fifty walk away with 650,000 pounds a year of course as a tax payer in this country he will continue to support the bank he ruined from his little nest egg hard life isn’t it.
We have hundreds of politicians thousands of advisors millions of civil servant all seeing that the temple of twentieth century economics is shattered and all we can do is try to rebuild it not even with improvements but just the same.
Surly its time to get some people who can think outside the box looking at some alternative ways to do things given some space and collaboration they may really find a better way.
Problem is that those who gain from things the way they are will never while they can manipulate an existence, be it ever so poor from the status quo even contemplate let alone consider any change no matter how it may benefit the rest of society just in case it slightly, ever so marginally disadvantages them and even if it did not is it worth the risk that it might.
Shame on us all for not ceasing the hour and starting to find a better way into the future
So the cry must remain long live Sir Fred Goodwin a fine example of all the 21century politics social and economic policy stands for after all his pension is a pittance by comparison to what our future generations will have to pay in taxes for his and all his colleagues legacy.
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#16, #21 'government of national emergency' and 'all the talents'
where were the Serious Fraud office and MI5, the Security Service in all this?
Forget terrorists and bombs in Downing Street, any single minded group of Financial market 'dark players', could easily destabilise any European Government, if they chose so to do, as we are now so very very exposed and in a word, bankrupt.
So why were the 'security services' not also monitoring what is undermining 'national economic security and stability'?
we do urgently need GB to take the short drive to the Palace, asap.
as for RBS being a dead horse, it would be the eco-friendly thing to do, to 'can' the 'dead horse', although do we have the demand for all that cat food?
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This is great news today as it will allow a line to be drawn under this whole sad situation.
I strongly suspest that these so-called toxic loans will turn out to be not nearly as toxic as has been feared.
The rebounding share price is also great news.
So let us all heave a sigh of relief that things are now beginning to change for the better.
Onward March!
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The only long term forecast the Govt should be interested in just now is the weather one.
If it's a long hot summer.....
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Back to this:
"First losses of up to £19.5bn on those impaired assets will be taken by Royal Bank. But to prevent the losses wrecking the bank, we as taxpayers will be injecting up to £19bn of new capital into it, in the form of non-voting shares." - Robert Peston
Robert, why can't they use some of their own capital to absorb losses? Are you saying 0.5bn is the best they can do without the bank being wrecked? Do you mean to imply they are tapped?
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These are only the "published" losses.
The true scale of losses at all banks is way beyond this sort of figure.
Much of the true losses are sub-prime.
Millions of sub-prime properties in the USA have gone from a price of 200k to zero.
"Property blight" has hit most American cities hard.
We may see it return here, just like in the 90s.
We didnt learn our lesson then, we've done it again.
Over-priced property is like a giant gaping drain, into which the banks hurl money....and most of it is on its way to oblivion.
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Another day and another day of hysterical BBC and media coverage. As has been pointed out elsewhere but has been drowned out by the wailing renta-crowds, the banks have been hit by a set of unprecedented factors which could not have been foreseen other than with the benefit of hindsight of which there is plenty in abundance. Sure mistakes were made and those have been well documented (ad nauseum). Not so obvious in the coverage is the political meddling by numbers 10 and previously number 11 have made matters much much worse - helpful to the banks to extent of making somebody swim with concrete boots on. Ridiculous capital ratio requirements has left the banks no alternative but to stop lending. Add to this some utterly dumb set of accounting standards and hey presto you have the mess we have today. The FSA the BOE and our beloved Government have all played a key role in making matters a great deal worse then they might have been. None of them are going to be sacked, are they now and I am pretty sure bonusses and pensions will not be shabby either. Keep fanning the flames of public outrage Robert, keep diverting attention away from the hapless bunch of civil servants and keep the hounds firmly on the trail of Sir Fred. If anybody has any sense they will be buying RBS shares - even 30% higher they may well prove a stonkingly good investment for those who can look beyond tabloid journalism.
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On RBS' accounts:
The underlying trading profit diminished from 10.3 bn to just 80m. This puts the Chairman and Chief Executive's comments about the profitability of the other operating units into great question. Much of this was related to "non-interest income", ie share speculation in a falling market.
The equity dilution is 400%, from 10m issued shares to nearly 40m. The total risk-weighted assets portfolio was 577.8bn, making the 300bn covered slightly over 50%. How the hell you can get it wrong to that extent puts the valuation of the second 300bn into real question. Also, where is the income from the recovery of the assets written off?
Take the 3bn they lost to the petrochemicql group LyondellBasell as a for-instance. That company has liquidity problems servicing its debt, but not in refinancing the debt itself. That could easily be solved by A BANK offering less than the loss in liquidity. Bingo, no need for Chapter 11 or 3bn losses. Ever shot your shareholders in the foot, Sir Philip? There'd be a strong moral case to get the Dutch to underright that too, given their responsibilities in the ABN situation.
Yet again, though, we discover the Russian influence. The Basell part of that 2007 merger, which went straight into the wall, was acquired from Len Blavatnik's Access Industries. Blavatnik has interests in Rusal, which you have seen a while back is associated with the Russian Mafia. Is this on top of the direct losses there, Sir Philip? Is it in fact possible that you've been outthought by the Russian Mafia?
The sectoral analysis of that risk-weighted exposure shows the 300bn exceeds the Global portfolio, ie includes UK losses, which should be recoverable. Is there any serious management going on in this business at all? At least they showed a profit on 500m on the sale of Angel Trains, their toy trainset (actually the leasing arm of British Rail).
This just doesn't add up, it's the failure to fight in what's obviously the biggest dawn raid of all time, known as economic warfare.
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I doubt we will ever know the truth of where the losses have been, where taxpayers money is going, or indeed where it is coming from in the first place. You can rule out getting information from the FOI act, Jack Straw will see to that.
These politicians and high ranking bankers are untouchable, they will never cross the paths of ordinary folk. Blair is a prime example, what are the chances of asking him down to the local and chatting about the past ? Brown, Darling, Straw et al are securing their own financial futures with nicely paid bank directorships, living in their own world, scratching each others backs, partying on each others yachts , ask Mandelson he knows.
The more we complain the more they laugh.
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Are there controls in place to ensure that the £25bn in loans paid out by RBS this year and next year go to British Companys operating in Britain? I would not like to think of the British tax payer paying the bill for loans paid out by RBS to front companies who use the loans they couldn't get in their own country to create jobs and wealth abroad.
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It might be "in his contract" but surely a 105% income tax on anything above - say - £150k would trim it?
(I' m 63, still work full time, pension will be less than one hundredth of Fred's)
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This was going to catch up with the banking industry at some point.
I work for a large bank, and in the last 10 years the switch in culture has been remarkable.
We used to service our customers and look after their best interests. Nowadays its a sell at all costs culture, be it mortgages, insurances, investments, loans or credit cards. What the customer wants is now bottom of the list, they have to leave the bank with some product (whether they need it or not) or you as a member of staff have failed.
The government needs to change the entire outlook and culture banks have. Otherwise this desire for instant profit, wealth and growth over and above the norm will only casue future problems for the banks.
Its the culture of greed that lead to bad lending and caused this whole problem in the first place. nevermind, at some point i'll get made redundant and i can go back to doing something rewarding.
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Here's a suggestion - how about changing the name of the Royal Bank of Scotland to something that represents the nature of the Bank.
It's majority shareholder is the "UK" taxpayer - 80% of which are English.
This is no longer a Scottish Bank it's the English taxpayers bank.
Name change please -
"The Mainly English Bank" or
"The English Taxpayers Bank"
Both much more accurate than "Royal BAnk of Scotland."
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So we lend them £19bn so that they can pay us £19bn for us to take on a potential liability of £325bn. We get to charge them a fee of £6.5bn but, since they don't have that we get to lend them that as well!
This makes the kind of lending that caused the credit bubble in the first place look sound and cautious. Sir Fred must be wondering what all the fuss is about. The net effect of these transactions is that UK plc is on the hook for a further £19bn+6.5bn+325bn. And what happens when (inevitably) RBS is not able to pay its first part of the loss?
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It's all OK... Bank shares were up 20% today, so if the government sells now we are all quids in!
Perhaps these are the first green shoots of a strategy?
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Usual manipulation. We were primed in advance to prepare for a writedown of 28 billion, including a loss of 8 billion. This morning, we are presented with a writedown of a mere 24 billion, including a loss of only 7 billion. All good news. The share price rises, as does the ftse, green shoots abound...
And last night, we get to hear about Fred's pension FOR THE FIRST TIME? So hate, hate, hate the Fred... and don't look too carefully at today's RBS small print.
And we're all reassured that Fester the Jester and FSA Phil will turn the ship around in 3-5 years, so we'll all get our money back.
Zombie bank. Zombie economy. Zombie morality. Zombie country.
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So - with the HBOS news to come very shortly - this makes another £500 billion (for god's sake!) of taxpayers money at complete risk to cover the mistakes, incompetence and dodgy dealings of the big bankers being encouraged by an inept Government and a hapless confused 'light touch' regulation.
And to think that poor old profitable little Northern Rock went to the Bank of England for a 'facility' (only) to possibly borrow about £3 billion if needed later.....!
(This was a confidential but prudent step at the time but which was leaked by someone to someone else and then released into the media some 4 days before the Company had been able to get it's IT servers upgraded for a planned Monday announcement and expected rush of on-line activity).
So the great Bank Run of 2007 hit the screens, and how! Trial by a media, allegedly in search of truth above all else.
Northern Rock has so far cost the taxpayer absolutely nothing; indeed when the loan is finally repaid, the taxpayer will have profited big time from the penal loan interest....and our disingenuous Government - as it has said often it intends to do - will make another profit selling the business on to friends in the City. A real win-win situation...or not.
Of course the 'small' shareholders (in the North East 96% are pensioners who kept their meagre shares as a nest egg for their
families) have lost absolutely everything, in the great UK Bank Robbery by Dick Turpin and Co. - so that's all right then.
If our leaders can so easily pinch the assets of the 'small' people, why can they not pinch the absolutely wicked pensions and aeroplanes - and whatever else may well lurk in the hidden corners - of the fat cats now benefiting from this gigantic taxpayer bail out loan to these two companies?
Are there some personal privileges or advantages involved, perhaps?
I think some investigative journalist should look into this properly, and get a 'scoop'.
Anyone know one?
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Can I thank Alistair Darling for the biggest laugh of the day?
He has - you could not make this up - asked 'Fred the Shred' to do the decent thing and give up some of his pension.
http://news.bbc.co.uk/1/hi/business/7911532.stm"
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'The market obviously doesn't think so RBS shares are up 20% already this morning.'
The market knows a get out of jail on the taxpayers card when it sees one.
So far the banks have run rings around the govt, of all the money put in by GB how much has made it onto the high st and how much have the banks simply absorbed?
There must be a good reason to not simply have guaranteed deposits and let one or 2 of the banks go (apart from the first one being in a Labour heartland) but I can't think what it is.
Every solution they come up with to the bad debt crisis seems to involve adding more bad debt. A bank that has needs 325bn in insurance for bed debts has to guarantee to make an extra 25bn available in credit as part of the deal.
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Oh just get the stamp out again. Bang, Ouch, there we go, another one on the forehead. What does it say ? MUG.
Is this how revolutions start ?
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the only reason RBS hasn't been nationalised is that it's a Scots bank. Imagine Alex Salmond's glee if the UK Government nationalised it and started making job cuts and closing operations north of the border. Labour would take a political beating unter the lines of 'undermining Scotland's economy' or the like.
RBS probably hasnt become a bad business overnight, it made the foolish purchase of ABN at exactly the wrong time.
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JAIL!
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In this article ("There Will Be Blood") Niall Ferguson predicts prolonged financial hardship, even civil war, before the ‘Great Recession' ends ...
http://tinyurl.com/dzlao6
... Ferguson makes the point that, "of course this isn't a recession. This is something really quite different in character from anything we've experienced in the postwar era ... it's a crisis of excessive debt. The deleveraging process has barely begun”. I couldn't have made the point better myself.
Moreover, it now seems to be dawning on most citizens that living within one's means could be the way forward from here. Less (debt) is more.
Meantime, RBS is now legally obliged to pump £25 billion of debt into the economy this year, over and above what it would have been lending anyway. Presumably this is so that the proletariat can return to that "I'm rich without effort or responsibility" kind of feeling of the past decade?
That should pull in the votes in 2010. Or am I being cynical here? Alice in Wonderland, or what?
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Am I the only one that thinks signing up to lending an "additional £25bn over and above what RBS would normally have lent" as a part of the insurance deal is just plain bonkers.
This pre supposes:
1. That borrowers want to borrow this money
2. That the risks are acceptable
3. That it can be done profitably i.e at the right price (RBS has a track record of lending at too fine margins)
In the current weak economic environment both 1 & 2 are very doubtful. Indeed because the economic outlook is poor and risk has risen banks need to be extremely careful about who they lend to.
I find it utterly bizarre that the government is trying to to encourage banks to shovel heaps of cheap debt into individuals and businesses that are already over borrowed. All they are trying to achieve is a short term boomlet prior to the election.
This is utter madness
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I just looked at what it would cost for a person with a stakeholder pension to gather enough funds if they were aged 24 now to plan to retire on a pension of £650,000 at the age of 50... all you need is to save around £35,000 a month.
Out of Proportion is the least of it... and this is for failure...
'The World is A Turning'... hopefully to a better direction.
JPWright
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ref 46 Menedemus
It could be argued that the Royal Bank of Scotland always has been the Royal Bank of England in Scotland. It was founded in 1727 by Hanovarian supporters who believed that the existing Bank of Scotland were strong Jacobite supporters, and who wanted a more successful pro-Crown outfit in place.
Now, there's an irony.
Breaking news: MPs are suggesting that Fred should voluntarily give up SOME of his pension entitlement.
Now, if Fred agrees, but only on the understanding that MPs give up some of THEIR pension entitlement (the most generous scheme in Britain, funded entirely by taxpayers), we might be beginning to see those green shoots...
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Thank you for posting the Hester interview. Yet another sanctimonious spiv is being given access to the "good old boys" money
machine. Time for talk is running out. Soon
it will be time for action . The middle classes are beginning to feel the pinch. They started the French Revolution. "Aux armes citoyens".
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I become more convinced by the day that we are looking, not at "a recession", but at a national economic catastrophe, induced by personal, corporate and government greed and idiocy. This news is merely one more lurch down the slope.
Printing money is the next, inevitable step now. Once this happens, sterling could crash, meaning that we will only be able to borrow from abroad at Russia-type, Iceland-type, double-digit interest rates, if at all.
We are sinking into a debt vortex, and becoming more of a banana republic than any country which actually grows bananas.
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Robert
'will be born by us'
Check your spelling please
We've all known this was coming, making a breaking news every time something happens is not helping.
Yesterday you were again left speechless about the pension story. Twice in one day!!
Breaking news
I am going to put the kettle on
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I suppose that does leave one or two more questions
We have all this hype, but what do the auditors say about it? Who are they? Are they different to auditors they've used in the past?
...and the board comments about future prospects?
Meanwhile what is Brown and Darling doing in the background whilst the "camera" has gone in a different direction?
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This is all about an election.
Scotland is the powerbase of this Cabinet and I am too long in the tooth not to believe there is a connection between an Edinburgh Chancellor and an Edinburgh bank and Scottish jobs .
Too cynical for words.?
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Hey, tech person!
Push that moderation button...I've tried emailing Robert to sort it out
Only on this blog too...
Strange way of getting me to stop posting...
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Will any good come out of all this mess? I hope so, yet the government and frankly the world seems hell bent on simply trying to repair and replace the system that has just failed us so completely. Why? Have we not learned that what is needed is radical change?
At the heart of it, people need to stop being so greedy. Nobody needs to earn £650,000 per year. End of story!
We should all be appalled at ostentatious displays of obscene wealth, instead we feed off it and there by encourage it, drooling over film stars, rock stars and dreaming of celebrity lifestyles when there are people out of work, loosing their homes and in many countries starving to death.
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RBS being forced to increase lending and it becoming a profitable bank are mutually contradictory goals. Glad to see politics aren't driving commercial decisions.
As a matter of curiosity who still thinks BARC was insane to paid any fee, any discount to avoid the government's clammy clutch?
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Posts #63 through to #83 awaiting moderation yet #84 StrongholdBarricades pops through like a jack-in-the-box. Again.
Are you covered in Teflon or do you work for the BBC - you're surely not a moderator?
Intrigued Groucho
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RBS is a great company in excellent shape! So wot if it lost a few quid?
Sir Fred is the best bank CEO of all time! Well, after maybe Adam Applegarth...
Of course he deserves to receive a £650000-a-year pension for the rest of his life (he is 50), to reward his achievement!
This blog is NOT censored by moderators! Free speech is here!
I am NOT being negative, so leave this post ALONE!
Let's all rejoyce!!!
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And, to add insult to glorious injury, I have received a letter from RBS informing me that, despite the recent cut in the interest rate by the Bank of England, RBS will *not* be reducing our mortgage rate. (This comes on top of a series of delayed and sometimes minimal reductions over the last few months.)
If the government can’t persuade its own bank to follow its economic leads, what chance with the rest of the banking sector?
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Dear Robert
This is my first post. And firstly I would like to thank you for your open and frank reporting on the issues that have lead us to edge of this financial abyss.
What has driven me to register and post the following comments is not today’s £24,100 million RBS loss, but the fact that these 4 bankers (specifically Sir Fred Goodwin) had the audacity to say, "he didn't see this coming".
I'm just a mere engineer, some one who designs and helps manufacture things to sell and buy, just in case any of our bankers have forgotten this term.
A good friend of mine (another engineer with a keen interest in economics) studied the money supplies back in 2003, and voiced a serious concern. That the money in circulation was at an historic high to the money held in reserve. Based on this he move from equities into gold in late 2003, this being about 1 year after our illustrious leader had completed the sale of 50% of our gold reserves at historic low!
I remained in equities until Nov 2007. But with the markets flat at 6500ish and after 4 years solid growth, I moved my sister and I trust’s into cash, which was returning a respectable 5%.
If we could study the limited data available in the public arena, and realise that this financial abyss was approaching, it is beyond my comprehension that our senior bankers can say "we didn't see this coming"!
And to compound there collective stupidity, arrogance, lining of ones pockets, they had anyone that dared to raise concerns, removed and paid-off. This is an unbelievable way to run a small business, let alone the future of our country!
And I have one further question. How did Sir Fred become Sir? If I recall a Knighthood is bestowed for service to Queen and country? In which case I believe Sir Fred should now become Fred, especially if we (the UK tax payers) cannot get his pension fund back into the public finance pot.
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The bank and government have decided to place £325Bn of assets into a scheme that will "insure" against future losses on toxic assets.
What's to stop this previously secretive juggernaut, in line with the recent culture of the banking industry, been economical (to say the least) with the truth about it's liabilities under the assets on it's books.
Mr Peston has pointed out recently that RBS has in the region of £3 Trillion in assets; how much of these remain an unannounced risk?
Somebody needs to be appointing a truly independent review of these books!
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I'm beginning to wonder if the "cure" is as corrupt as the system that caused the original problem ?
Post 48
The cure is in fact the really corrupt part.
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22. At 08:42am on 26 Feb 2009, GrumpyBob wrote:
"Were where the Auditors in all this ??? ...
Losses on this scale cannot have gone "
Until the credit/debt bubble burst there were no losses to miss and so no cover-up - all these loans would have looked good so long as the asset price bubble was inflating.
This should have been the role of bank risk departments, Government, FSA and BOE to identify inflating bubbles and stop them before they became dangerous.
Now asset prices have savagely deflated the loans used to pump the asset prices up in the first place look extremely bad, the degree of toxicity being proportional to the speculative nature of the investments made with the loans. More speculative more risky.
Picture how it works - you have £500mn and want to build a new hotel - you could invest your own money. If it goes wrong you lose all the money.
Why not lend the bank 500mn and then borrow through a separate company 500mn to build the hotel. Now you 'own' the hotel and the bank owes you 500mn
Market is good - the value of the hotel is now 1bn. You borrow another 500mn from the bank to build a second hotel mortgaged against the first hotels 500mn increased value.
Now you own 2bn worth of hotels, the bank owes you 500mn and the banks has 1bn exposure to loans - collateral looks good 2bn worth hotels against 1bn loans.
Profit is good and there is no hole in the finances to find.
You could repeat the cycle of mortgage, invest as many times as the inflating bubble will allow you.
Market goes bad - hotels are worth 250m each now. Bank now has 500mn worth collateral against 1bn loans - this looks bad for the bank.
You still own the hotels and so long as people still holiday and they are profitable you are OK.
The bank still has a problem - the risk you will default is increased (it is more likely your hotels will fail but not certain) and they have a hole in the balance sheet.
The more cycles that have occurred the bigger the problem for the bank.
You are however angry with the bank because the 500mn you lent them is at risk (you have forgotten that you actually borrowed this money from them).
So you agitate with the government to bailout the bank to prevent you losing the 500mn if the bank fails.
Government agrees to bailout the banks - you are happy, now your 500mn loan to the bank is guaranteed and you still own 2 hotels.
Worst case scenario for you is now is the hotels default and you get the original stake back from the bank plus get to keep all the income generated in interest (on the loan) and profit (from the hotels).
If you were really clever - you could set up a new company to borrow 500mn from the bank to buy the defaulted hotels from them.
So now the bank owes you 500mn and you own 2 hotels.
The bank meanwhile has lost 500mn which is funded by the government.
Ever wondered why the rich get richer?
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Deary me .. how bad things are getting.
This is setting the taxpayers up for one massive hit.
The economy is in free fall.
Bad debts will rise at never before seen rates.
The prospect of a bank that has just burnt 24 billion now continuing to blow this new 19 billion must be highly likely.
And then comes the 'insurance' kicker whilst the British tax payer is lying on the floor gasping for breath.
Anywhere up to 325 Billion.
What idiots are in charge.
My Dad's birthday today, he's 71 (happy Birthday Dad). Just got off the phone, Australia to UK (Midlands), and he say's if there was an election tomorrow, Labour would likely poll not only less than the Lib Dems, but less than the BNP.
Do I need to wonder why?
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It might not be good news but it is necessary news. At least the actual numbers that lie behind the bank bail-out are becoming apparent. This will add to the prospect of the economy finding a floor before it crashes into the second sub-basement below the car-park.
This is all very serious stuff in very serious times. We must all be responsible to a point and this is a sign of progress of a sort.
It is a great pity that we are not making progress on the political front where everything seemes to have stalled as a seemingly endless procession of failed regulators and former bank executives - they do not justify the term bankers - parade their incompetence and greed to all and sundry.
The only way for us to get beyond the stocks and the pillory is for the government to pack its bags and go. We need a new start and we need it now!
Failing that; I too might take up the kind invitation of the Metropolitan Police for a long hot summer. Takes me back to my youth!
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Rage?
I think someone needs to explain (again) why the tax payer forced to cover the immense sums.
Are the banks using this oppertunity to jettison all their doubtful debts? It certainly is the ideal oppertunity to clear all those filing cabinets in the basement.
As far as the public is concerned, we need to have full and open reporting as to how much of a hit we will take over the coming years on 1. The monies repiad to the tax payer. 2. The extent of the losses which will be incurred on these insurance schemes.
We the tax payers now read about these eye watering sums of money made available to those instiutions who should be anticylical. They have lent us too much money in the good times, and during the bad times, just when its needed they are over cautious.
And we ask ourselves, when it comes to new schools, care of the elderly, etc etc there never was any extra funds, and now with the banks swallowing unheard of amounts of public money; the elderly can sit in their care facilities having to make do with their ill fitting false teeth.
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OldTimer0039
#225 "Taxpayers to insure £500bn of bank assets" 24/2/09 said...
"We live in a democracy, and we have a general election looming.
Now just suppose for a minute, that the current triumvirate of political parties that we can sensibly choose from to lead us into an uncertain future, were joined by a fourth political force.
With a manifesto containing a promise to prosecute for fraud, wherever possible - bankers, company chairman, politicians et al , who drove this gravy train (multiple Ponzi schemes packaged up as sound investment packages ) off the rails - I would think that current opinion polls would be shaken up, somewhat.
If there was a promise to investigate collusion between bankers and politicians leading to this financial meltdown, I would imagine that support for this new party, would be even greater.
We, the populace, have the destiny of this great country, within our own hands.
Direct action is needed, but within the democratic framework.......no civil unrest whatsoever, but direct action that would have more than a squeak of succeeding.....
what say you all ?????????????"
Groucho says...
Yes - Any political party that promised immediate and FULL investigation of this mess followed by criminal action, imprisonment, stripping of illegal gains etc. would win by with a massive land-slide. They would still have to sort out the current mess. But the present rotting dish-cloths in Westminster (all 3 parties) are making things rapidly worse.
The Snark wasn't a B...(oojum) it was, and still is a B...(anker) - or possibly a B ...(rown)
Indeed Carrol was prophetic.
Groucho
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This comment was removed because the moderators found it broke the House Rules.
This comment was removed because the moderators found it broke the House Rules.
This comment was removed because the moderators found it broke the House Rules.
Hi Robert,
Could you (if legally possible) make a table of all banks CEOs with salary and pension. I am keen to know what the pension of former CEOs, those from the boom times. (may be Mr. George Mathewson).
I am really shocked to learn about pensions for these private bosses because I thought private companies are all about hire-n-fire with no pension for all staff.
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To No.55
The POCRTL has instructed its members to
fight any attempt to feed them canned RBS dead horse meat. Beware. Once again they are sharpening their claws. Once again our sofa cushions and wallpaper are threatened. Be
afraid. Be very afraid.
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Stable doors and Horses etc....
NO MORE MONEY FOR THE BANKS
NO MORE MONEY FOR THE BANKS
If these banks really were horses they'd have been shot immediately. They are dangerous writhing, crippled beasts. Shoot them now and put them out of their suffering.
NO MORE MONEY FOR THE BANKS - CANCEL ALL AGREEMENTS TO 'bail them out'
NO MORE MONEY FOR THE BANKS
NO MORE MONEY FOR THE BANKS
NO MORE MONEY FOR THE BANKS
Then start on criminal proceedings.
OG.
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Let's get this into perspective.
This is just one bank. A private company, incorporated in this country, but trading globally.
We (the UK) may need banks and banking (but not the kind of trading they didn't understand and bankrupted themselves over). We have other banks, some of which remained prudent while the rest of the herd stampeded.
We do not need this bank. Certainly not to enough to bet our entire economy on "rescuing" RBS. Certainly not enough that taxpayer's money filters through to gold-plated rewards for its former executives.
This government were not elected to play fast and loose with our money. And our children's money.
There is no bottomless pit. We have been lied to, deceived, taken for fools. (The bigger fools the core Labour consituency, who thought New Labour were representing the interests of the working man).
Even now, the measures being taken towards "recovery" are for the good of the elite (politicians and their cronies) and poverty for the rest of us.
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Rahere mentions the Russian mafia. There was a word for the cowboy capitalists of the post-Soviet era. This word is now clearly appropriate for the British banking elite, and perhaps some other business leaders too: the kleptocracy.
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Further job losses are regrattable in the current economic climate, but...
ROBERT!!! WAKE UP!!!! Have a look at this!
Can someone FIRE the "moderators" of this blog NOW??? Today, not tomorrow. TODAY!
PLEASE>>???
Get rid of them and allow free speech!!
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Will the BBC ever allow free speech again?
PLEASE?
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RBS is costing everyone of working age 10,000 pounds .
We now need 65 of us to pay for Freds pension. Any volunteers?
This would of course be impossible for the unemployed to do, since their annual income will be 3146 pounds.
No one in Govt or media seem to double check figures today so here is a bit of basic pension knowledge for readers.
At 650.000 per annum, which will, according to scheme rules increase each year, the REAL COST ( according to annuity rates today) will be .............
19 million pounds!
(3.28 per cent per 100k is todays annuity rate for a 50 year old,increasing pension at 3 per cent increase per annum)
PS Robert. Check the fund value. You quoted 6 and a half million.. plain wrong.
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#46 I have to agree with you. RBS has the word "Scotland" in its name, is HQ'd in Scotland, and the entire Scottish nation (yes, a full 9% of the British population) sees it as something on which to base their pride, and that's why Gordon and his cabinet of Scottish cronies wants to give it such a leg-up. Ironic then, that RBS isn't actually Scottish at all, but is, of course, English - being NatWest bank with a bit of RBS thrown in. Sooner we get rid of the tartan and the stylised St Andrews flag for a logo, the better.
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Good God, what a scandal.
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Robert
Please can we have more gore re: the FSA passing blame for soft touch regulation to the government .
I got a little excited hearing about this as I honestly thought this could spell the end of Gordon.
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Look, we have had months of this toe-curling torture and, unless the nettle is well and truly grasped, there are months more to come. This tax-payer funded life-support for the zombies is just unacceptable. Good money after bad. Just think of the future liabilities.
Huge mistakes have been made and are being compounded. All that the government is doing is providing an financial airbag in the on-going crash/correction of the market to levels of sustainability. You cannot buck the market ever!
Corrections clean out the rubbish, the failures, the false business models, the ponzis. They did 1929-32 and the same is happening now. You can't stop it. It is built into capitalism and free markets.
We know what went wrong. We know that there has been a system failure of huge proportions. The analysis, the "history" is clear.
The future is what matters.
We need a viable, well-regulated finance system to ensure the efficient redistribution of capital for commerce and industry. Agreed on by all I think.
Short-term 'receivership'. Restructuring to get sensible lending going. Then re-privatise at some medium term point down the road.
Come on Government. Jump over your own incompetent shadows and act for the good of the nation (and the world economy).
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DEAR ALL....
GETTING BORED OF ALL THIS BANK STUFF NOW, TALKING IN BILLIONS/TRILLIONS. IT IS ALL DONE, NO TURNING BACK THE CLOCK.
IN THE LAST DAYS..........
MY NEIGHBOUR JUST GOT A NEW CAR (HES A BANKER!) (NO, REALLY)
A BANK PHONED ME TO SAY I MISSED A PAYMENT ON A LOAN I DONT HAVE! AND I DONT HAVE AN ACCOUNT WITH SAID BANK!
BUSINESS RATES UP, BUSINESS SALES DOWN.
GOIN OUT ON THE ROAD NOW TO TRY AND DRUM UP SOME ORDERS TO PAY COMPANY CREDIT CARD BILL WHICH I USED TO PAY WAGES LAST MONTH.
HAPPY DAYS!!!!!!!!!!!!!!
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Robert
I note from your interview with Stephen Hester that he refused to justify the magnitude of his predecessor's pension. That really isn't good enough. Under these exceptional circumstances any decision (contractual or otherwise) needs to be understood by the tax-paying and shareholding public. The RBS statement contains plenty of 'motherhood and apple pie' comments about restructuring but very little about the appalling management practices and the lessons learnt. Stephen Hester came over to me as more of the same, providing political-style answers to your questions, Robert, and really not inspiring much confidence for the future of RBS.
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Is forcing RBS and the banks generally to lend more the answer? The crisis is a result of fundamental imbalances in the economy, of consumers and the government spending beyond their means, and an economy massively skewed towards housing and financial services (not to mention a vastly bloated public sector). The crisis is as much a problem of demand for credit as supply.
Who is at fault for these gross imbalances? The banks are a handy scapegoat.
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68. englandrise:
"This is no longer a Scottish Bank it's the English taxpayers bank".
It is indeed, and there is a huge irony to this.
As I understand it, the Bank of Scotland was set up by nationalists as part of a campaign for independence.
As a counter to this, the "Royal" Bank of Scotland was set up by the (English) crown as a loyalist alternative.
I lived in Scotland for a while and was told this story by a fervently nationalist colleague. He did his banking with the BoS and considered RBS an alien (essentially English) institution.
So, via hundreds of years, the Royal Bank has gone back to where it began, owned by the English crown!
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Presumably these £325bn of bad assets have not appeared overnight. I would like to know what the auditors have to say about this and why they have signed off previous accounts for RBS.
There is obviously a strong case for suing the auditors so let's start to try to get some of our 'superb' investment back.
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HA HA HA HA
Well, well well, once again the taxpayer is funding the fools of yesterday.
For anyone who isn't quite clear yet - YOU'RE GOVERNMENT IS LYING TO YOU.
I saw AD on tv this morning as he revealed his 'plan' to save the Economy.
After the losses the Government is gambling that there will be a recovery and these banks will be able to pay it all back.
...however AD is missing 2 vital pieces of logic.
1) Just like a bad gambler, the banks have lost a lot and are assuring us that 'the next big win will set me straight'. Anyone who has had a gambler in the family knows that this is very rarely the case.
How MUCH PROFIT DO THE BANKS HAVE TO BE MAKING TO START PAYING THIS BACK?
I can guarantee that the banks will be claiming poverty once the recovery starts - to put off paying back the Government - so they can gain a competitive advantage (nothign changes there). They will be able to cleverly hide their profits - running the risk of us hitting the NEXT RECESSION before the money is paid back.
2) The ONLY WAY THEY CAN PAY US BACK - is for an ECONOMIC BOOM to raise revenues and profits. However judging by the scale of losses, this boom WILL NEED TO BE BIG - BIGGER THAN THE LAST ONE - and we all know what happens after a big boom don't we?
A WHOPPING, NEVER BEFORE SEEN, RECORD BREAKING BUST.
At that point the whole thing will be over - the banking industry and the world Economy will go back to the dark ages.
All AD is doing is selfishly putting off this crisis and pushing it into the next generation and making it ten times worse.
He realy is a muppet.
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68. At 09:39am on 26 Feb 2009, englandrise wrote:
Here's a suggestion - how about changing the name of the Royal Bank of Scotland to something that represents the nature of the Bank.
It's majority shareholder is the "UK" taxpayer - 80% of which are English.
This is no longer a Scottish Bank it's the English taxpayers bank.
Name change please -
"The Mainly English Bank" or
"The English Taxpayers Bank"
Both much more accurate than "Royal BAnk of Scotland."
+
How about SEA Bank
Scottish
English
American
Bank
(because historically that's where all the cash has gone)
BTW i have just copy-protected that name
it's mine aiight
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69. waitingforthepain:
"The net effect of these transactions is that UK plc is on the hook for a further ?19bn+6.5bn+325bn."
Exactly, but UK plc does not, even remotely, have access to GBP 350bn.
The only solution will be to print money. This will be given some euphemistic name like Quantitative Easing, but international markets will express their view more succinctly - "ditch sterling".
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strongholdbarricades
I find the non moderation of your posts hilarious! Please don't stop posting-who knows why this freak of moderation occurs? Methonks you have your own moderator or, for some weird reason, your posts are unmoderated! Try a vitriolic post as tester!
All bank shares are up-in particular RBS and LBG. Wonder if it's the level of taxpayer support that's producing such confidence? Or maybe the Market thinks the shares will rise further so tons of people are buying quick?
Mind you, weren't the losses for RBS expected to be higher? P'raps that's why?
Knowing the detail would be good-rahere-thankyou for your insightful comments!
Wonder what will happen next? Bit of a soap opera, this!
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This comment was removed because the moderators found it broke the House Rules.
Anyone seen the latest on bank charges?
The appeal by 8 banks to stop the OFT looking into their overdraft charges has been thrown out!
A small victory for the people?
Go to it OFT!
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This country has been brought to it knees by ineptitude and greed. Maggie started all that corporate greed many years ago, now we are paying a terrible price for her stupidity. I refuse point blanc to live in a country run by fools and downright liars. No one has been called to account, everbody passes the buck and we are all made to pay for it all, well as far as I am concerned you can shove it. I have decided to emigrate to Australia, possibly Canada. We are governed by scum, scum sir as Oliver Cromwell famously shouted at the governing body of his day.
Norman Mackenzie
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Robert
Can I make a positive suggestion that the serious fraud squad recruit some of your informed posters particularly Rahere to investigate.
1) whether share holders in RBS were misled regarding the value of assets held by RBS and whether the board are personally liable for shareholders losses under the 2006 Companies Act
2) Whether Fred Goodwin was in any way personally responsible for withholding information that the Act requires to be made public.
3) Investigate the auditors treatment of Risk and asset values.
If Sir Fred’s pension is water tight contractually as stated, it is just another asset that, if a case can be proven against him that would help to compensate some the share holders for their losses.
I have criticised Hank Paulson in previous posts for letting Lehman Brothers go to the wall however, the scenario we now face at RBS suggests that this may have been the best option
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For me this has all gone too far.
Brown/Cameron (with my sympathies) /Cable.
Stop supporting the defunct city and deal with the problem. It seems that the banks/auditors/fund managers/traders/govt/regulators are all on the same gravy train - and afraid to really call a spade a spade as it will bring their own little empire down as well. Easy money.
Lets have a straight forward police investigation of ALL parties - was RBS or others trading whilst insolvent (in which case punitive damages/custodial sentences for the directors) - ditto for the auditors. Perhaps a 'class' action on fund managers who simply allowed things to escalate. Need we go on.
Brown will be anilated at the next election if he doen't really show his teeth.
Maggie (who may be equally culpable but at least understood public mood) would at the very least by now have had most of the above in the stocks if not the tower for public humilaition by now. Not a chance of any pension.
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Who on earth is advising HMG to accept swapping the debt for NON VOTING equity? Given the magnitude of the taxpayers' exposure, the degree of influence we have over the future management of this sand bank is wholly unacceptable.
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Another dark day in the UK economic story.
Presumably, the bank has basically looked at its debt book and chucked in anything that it does not fancy chasing.
Therefore, at some point when some of the toxic debts are reapid, as they will be, there will be a reported profit and somebody will take all the credit for turning the bank round.
Mr Goodwin obviously got out at the right time. If he had waited until next year, he would have been too late to take his pension at age 50 as the rules are changing.
It is difficult to believe that he will be allowed to keep this level of pension. He should be given the pension of the average of the RBS and the rest of his pot put back into the system to pay the redundancies that are about to happen at the bank.
I do not believe that bonuses should be paid at all when the business has made such a loss. Presumably the bonuses are called "profit-sharing" and there are no profits to be shared.
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Its all someone elses fault. No one is accountable.
The bank of England apparently had a blind eye on the banks....What the heck does that mean.
The Govenment has used the mantra " the market will decide" for every section of the uk, from hospital cleaners to airport safety arrangements. Their belief that all private enterprise must be grand and their light touch policy would be appropriate led to them backing out and non intervention. So its not their fault then.
The banks themselves were so busy upping their profits they sacked people who challenged their stategy. They say the FSA didnt spot the problem. So its not their fault.
The bank executives hold themselves faultless and continue to allocate bonuses and pensions to themselves.
The FSA say that they were unable to spot the issues, as they were tied up in paperwork from the government.
Meanwhile the public have been drip fed an opium of acceptance via cheap credit cards and false property prices. We all assumed that the banks, the shareholders and the governement were doing the right thing.
Someone, somewhere is resposible. Who, how and why did they get away with it for so long?
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I understand bank bosses and cronies are demanding that their contracts (bonus and other stuff) be honoured even though the banks are practically insolvent. This money will have to come from bailout funds.
I thought if a firm become insolvent, supposedly any claims (even employees)have to go to courts. Does this not provide a basis for denying contractual claims by the fat cats that create this banking mess?
David
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To Victor AngryMan
I was going to report you for racist comments.
I really detest short-sighted xenophobes like you who go to great lengths to talk down the Scottish people.
The ENGLISH economy? Excuse me but when did Devolution occur. Oops, I must have been asleep that day.
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Surely the bank should not be trading because it is obviously insolvent. Those would be the rules applied to my business. WHy should any of the banks be treated any differently.
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On second thoughts, perhaps the new name for our banking elite should be the klepto-illegitimocracy.
Grrr! (As a Beano character would say.) :-(
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BoE Governor is saying it could take more than six months to guage the depth of the financial crisis
Any way you can blog Robert about what specifically he's on about?
He does seem a very honourable and honest individual, but why the timeframe?
During this unknown period are the banks literally flailing around in the dark?
What happens to all those bonds nearing redemption?
What about all that big business refinancing?
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Amid all of this, when are the banks going to be forced to repay all the bank charges that they have stolen over the years. Is this money already accounted for in the reported losses?
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In retrospect, how much better it would have been if the public money had been used to fund new, "green field", banks which could have started lending immediately
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#61 killthehedgies. So the banks have been hit by "a series of unprecedented factors which no-one could have foreseen other than with the benefit of hindsight" (sic).
Tell me you ever heard of Roubini? or Marc Faber, or Martin Weiss, or Chris Martenson or Michael Hudson?
It was not so hard to foresee - its just that the people you complain about thought you´d be happier not knowing about it, so they didn´t tell you.
You wanna buy RBS shares? go ahead!! Don´t cry when you lose. - The next stage is not so hard to foresee, no hindsight needed.
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# 68 england rising
Good idea, RBS are in dire need of re branding.
I am against protectionist policies, but i am fed up with being governed by Scots, they seem to have looked after their own well enough, while being bankrolled by the English.
My business is tourism marketing, so I would like to know exactly who decided England received the smallest slice of the pie?
Visit Britain 2007
(overseas marketing budget) £35.5m
Visit England £12.3m
Visit Scotland £21.7m
Visit Wales £13.5m
I rest my case!
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With all the figures regarding how much debt everyone is in, if the government had given everyone a monetary amount rather than bail the banks out, then we would have put that money in the bank, purchased cars, and also 1st time buyers could afford to buy houses.
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While recognising that this news is appalling, and that the warnings about improper lending and borrowing had been commonplace since 03/04 or thereabouts, and should have been acted on much sooner, we have to do something about it.
Each news bulleting describing the current crisis generally, being couched in the most dire words is now contributing to the problem. Therefore each, 'dire', 'grim', 'eye-watering' , etc., description simply adds to the problem.
The News Media are now part of the problem. News must be reported, but the manner in which it is handled, is certainly amplifying it.
Discretion and tact, etc., have to be applied; not the current high-powered torrents of ill-considered words.
Should Journalists like Mr Peston be sincere in their anxiety about this crisis, and would like it cleared before any of us is much older, then they are going to have to take a different approach.
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#139 StrongholdBarricades Jumped an hour's queue again? Someone on the mods is having a joke at your (and our) expense I think! :-)
"During this unknown period are the banks literally flailing around in the dark?" This should have been moderated on the grounds that it's not literally possible. ;-)
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Gordon Brown should be in JAIL!
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Has the run on the bank started yet?
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Can we run a pole?
Labour in or out?
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#56 OnwardHo - I hope you realise halluconogenic drugs are illegal in most jurisdictions.
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The funny thing about this is they are being pilloried for all the bad loans.
They offered to remortage several of my properties but in every case they werent the lender of choice for me because they were so rigid in their Loan to Rent requirements. They were extortionate 150% plus.
Funny as now I am still paying the mortgages the Loan to rent is high and rising and the muppets that they did lend to are defaulting.
They couldnt spot a good risk if it slapped them in the face with a Scottish kipper
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Hang on! The Government are in charge of making the Law...
Contract are subject to the law
All it needs is a quick, one line statute for banks and similar institutions. This can have that there is an implied clause writen into any employment contract, past or future, that pensions and pay-offs are able to be reviewed by the Institution if there is a eg 70 per cent vote on this by shareholders ie us.
Sorry Goodwin, we changed the goalposts when we realised you had thrown the game
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#33 MartyB1976 You are asking yourself the right questions - "who gives you work and why should you do it?"
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As Oscar Wilde may have put it, to lose £1bn may be put down to "unprecedented turulence" to lose £24bn seems like downright carelessness.
Wrongdoers must be brough to account
It is vital Banks support small businesses at this time, theo paphitis recent panaorama programme was an execlent expose of the uk economy. To misparaphrase another dragon it is for this reason alone RBS should be nationalised.
I can't help thinking that UK manufacturing and industry would be very envious of these vast levels of support.
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Strongholdbarricade!
What is your secret?
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Nationalise this bank right now... how dare Gordon Brown load us the taxpayer with hundreds of billions of risk in toxic debt and still allow the fats cats to keep 25% of the RBS.
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Robert
I have a couple of questions which I wonder whether you can answer.
1. Does this have to be passed by Parliament or is it a done deal.
2. Why do we need these banks to lend money, can't someone else do it who is solvent e.g. pension funds other institutions.
Surely the best policy is for govt. to keep out,let these banks go to the wall and start again.
It looks to me as if we are heading into a depression and its going to take a good decade for things to return to anything like normal.
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What, no clarity on exposure?
Surely a master of the universe has this simple fact at his command.
Where is the exposure by class of risk.
What is the probability that bad events will occur and what it will come to.
Quantus periculum et genus, not hard chaps, surely?
One does wonder what was in the risk models...
A classification of risk-events?
Maybe a discussion of the chance of an event?
Perhaps the odd analysis indicating whether it happened to be temporary or permanent in nature.
And possibly narrative explaining how these were recognised in the risk models... or was that just too much like hard work?
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The real issue for the majority of the honest people out there is to to be given a clear indication that after the dust settles on the current financial hiatus those who have not been responsible gain some advantage as we move forward. Savers need to be favoured over debtors and those investing in real core business favoured over speculators. Basic principles which seem to have been abandoned.
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"Gordon Brown inadvertently broke Commons rules by sub-letting his constituency office, the Standards and Privileges committee has ruled.
The MPs say the prime minister had made no financial gain from the arrangement and they believe there was "no intention to deceive".
But they say Mr Brown should have ensured he had consulted the Commons authorities to check the rules.
They say that Mr Brown had apologised and "no further action is necessary".
http://news.bbc.co.uk/1/hi/uk_politics/7912310.stm
I dont believe this. There is just no way Brown could ever bring himself to say sorry for anything
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it seems from a snapshot of the figures relating to the 'impaired assets' side of this complicated deal (with effectively the govt giving RBS all the fees that they need to pay back for the govt insurance) does indeed seem to confirm that RBS is 'tapped out', to use the Depression-era American phrase
which is worrying of course
but the gov'ts inability/refusal to consider full nationalisation - even for a short period whilst trying to sort out the books etc - is allowing the banks to retain the upper hand, Goodwin to have his Old Boys Club pension deal, RBS shares to go up again and so on
the rise in RBS shares might be brief but is amusing, especially as I bought some shares at 12.4p a couple weeks ago as a bit of a dare
but even as a new shareholder I think that RBS should be temporarily nationalised and the shareholders (many of whom are presumably now big hedgies, as at Northern Rock, hoping to make a killing and complain about the infringement of their human rights if they don't)
for the simple reason that all the money being poured into this zombie bank, supposedly to restart loans to SMEs etc, may as well have disappeared into the fires of Hades
if all those billions went through a nationalised bank - or a Nat'l Investment Bank - the path would be straighter for getting our taxpayers money delivered directly to the people who need it: SMEs, first-time buyers if they exist, new start up businesses etc
both here and in the USA the govts and regulators remain sadly in the thrall of the City and the Wall St boys; no matter how many times they are let down they just keep going back
that's how the Old Boys network works I guess
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87,
Yes you are too cynical, I am Scottish and want rid of Brown RIGHT NOW!!!!
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Why are we all listening to this pathetic excuse for a Government forcing taxpayers to pay time and time again for failed banks and money grubbing bankers.
Good God they should all be facing serious criminal chages of defrauding the taxpayers, what do we have a criminal justice system for?
And the bankers are just as bad, they bleed a massive fortune out of the market.
Gov. pour money into banks and taxpayers are forced to pay.
Gov. refuses to accept how badly they have failed, Makes up new laws almost daily, to secure themselves and cling onto their seats and money with sickening tenacity.
WE have been had, Big Time.
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I have seen very little column inches on the role of the rating agencies such as Moody, Fitch , Standard & Poor who rated the securities that the banks bought and lost huge sums on. Shouldn't they take the same heat as the bankers?
Moreover they were paid by the banks who were selling the securities to other banks seems to me there is a question over their independence?
Robert please can you look at this becuase it strikes me that these intitutions are getting off scott free!
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As the saying goes "The truth is out there"
The truth may well be out there but I can't help but feel that the public will never hear it.
This Govt must be playing us all for fools. A 24 billion loss, 325 billion taxpayer guarantee and this is being hailed as good news! I have heard a few mouth pieces today state that the money can finally start to flow back into the system now that RBS are legally obligated to provide an extra 25 billion in loans to business and individuals.
Hester has identified 325 billion in toxic assets which we (the people) now guarantee. This will allow RBS to restruct and get back no the road to recovery!!! All hail Brown - he has saved us again.
Sorry but I don't see how these numbers add up. It wasn't that long ago that many sources were putting the RBS balance sheet at 2 trillion. Surely if the assets were this large, 325 billion in potential bad assets - or 15% - would have been managible without numerous bailouts and 84% ownership in the hands of the taxpayer.
And exactly who is going to borrow all of this extra cash??? If we are returning to old fashioned banking the majority of people who walk into RBS would never meet the criteria for a new loan once the bank had a look at their existing debts and their income. Brown and Darling can't have it both ways by re-inflating the credit bubble and at the same time practising responsible lending. The whole thing was built up on loaning money to people who would have never traditionally qualified for a loan in the first place. And if RBS can't just sell on the risk to some other chump like they were able to do in the credit boom they`re not going to want to lend.
Let`s face it if someone working in the auto industry (for those who still have a job) walks into a branch of RBS looking for a loan I don't think the bank is going to be falling over itself to give that indivdual money in this climate!
Don't worry Gordon you still have about 18 months to finish the country off before you can go the way off Fred the Shred. And by the way will you be giving your pension back when you leave???
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#68
Dangerous precedent methinks. What would we rename the UK's oil resources?
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I tire of reading this rubbish.
Plenty of you guys, and gals, post some great stuff on here, only trouble is that out in the real world, i.e. Where all the Government employees, Quango members and the great unwashed live, nobody gives a fetid dingo's gonads. People continue to saunter along sucking Gordy's drivel that this is the only way, FFS Labour still seem to have substantial support in the country, they have no concept of what is going on.
FUBAR
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Robert
Why is it that our stakes in these banks an "non voting"
This leaves us effectively underwriting these "businesses" with no real say in how the business is being run.
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we used to here business and banks talk in million then recently billions and now trillions but what we have here with our prime minister is brownillions, which is taken from the old english words- brown- nil-lions.
-brown -literally means the sewage type which this pm/chancellor has put us in, -nil-is the amount of money saved during his time looking after the treasury when we all paid the highest taxes ever recorded, -lions-which he and the head people at the fsa, bank of england and the treasury should fight in the new wembley arena.
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Things just get better and better for the UK banks.
http://news.bbc.co.uk/1/hi/business/7910852.stm
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I remembered an old story, and lifted the following from the BBC NewsQuiz site. (http://www.bbc.co.uk/radio4/comedy/newsquiz_cuttings.shtml)
"After being charged £20 for a £10 overdraft, 30 year old Michael Howard of Leeds changed his name by deed poll to Yorkshire Bank PLC Are Fascist Bastards. The bank has now asked him to close his account, and Mr. Bastards has asked them to repay the 69p balance, by cheque, made out in his new name."
In these difficult times, if we the public could change someone else's name by deed poll, who would we choose I wonder, and what to?
Any suggestions?
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The call from the BBC is very strong for Goodwin to hand back his pension.
But where's the call for Gordon Brown to make reparations for setting up and running a useless regulatory system, letting the whole situation get out of hand then blame America.
Hand your pension back Gordon (and your £5m a year from JP Morgan, Mr Blair).
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I see the BBBBBBBBBC Business News - Brown Boom - Bust, Bank Bonus, Bank Bailout British Bankcasting Corp Business News is on topic as usual. Another day another boring banking business, as usual, topic. Goodness I wonder what it is like outside banking. Does anything outside banking exist. Does anybody care. Is everybody nearly bored to death with bankers. Is too much exposure to banking akin to a virtual lobotomy.
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This is the Bank where the HR Director, Neil Roden (who worked with Fred, the World's Worst Banker at Clydesdale Bank) has just AWARDED THE MAJORITY OF RBS UK STAFF A 10% PAY RISE.
The excuse for this largesse with taxpayers money is because they have done away with profit share. Funny they do this in a year when they lost a record amount of money.
The award is non-pensionable, presumably so as not to jeopardise Mr Roden's forthcoming massive pension.
And they have still awarded bonuses to staff - albeit deferred and split across the next 3 years. And - staff get borrow money (at 0%) equivalent to the amount of bonus they would have received.
When will RBS and it's overpaid, over-protected employees get into the real world where working for a bankrupt business means something other than business as usual.
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# 101 thorasgain
"Rage?
I think someone needs to explain (again) why the tax payer forced to cover the immense sums."
I agree with your sentiments but there is absolutely no point in asking for an explaination because through all this it has been quite clear that we (the taxpayer) will never get one.
The last 5 or 6 months has shown that this Govt will put whatever it has to in the banking system and to hell with the rest of us. If it takes 10 trillion than that`s what Gordy will throw at it.
The will and concerns of the people don't matter one bit to these guys.
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Brown cannot possibly let RBS fail, because it has the word 'scottish' in it. All things scottish must prevail.
I can't for the life of me think why, can anyone else?
I see no point as a taxpayer investing in any more Banks - the thought that I am doing so without any consultation makes me angry. The majority of posters are now saying we should have let the Banks fail, and I have said so in the past.
Paxo seems to have lost his 'stuffing' he should have said Brown should be asked to 'go' not apologise.
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Here's a question for anyone complaining about Gordon Brown's role in this...
Just how loudly would you have screamed if he'd have taken drastic action about five years ago to reduce the sort of activity that RBS (and other banks) are now being castigated for?
I can just imagine the incessent whining we'd have had about 'Stalinist overregulation' of financial services - and the complaints we'd have had from the city about how Brown was reducing our competitiveness in the global marketplace with his red tape.
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There's a rumour going around the blogosphere that Alistair Darling carried out a telephone canvass of voters in his constituency of Edinburgh South West last weekend. He phoned 17 voters and everyone of them said they were voting Tory! This may just be another internet rumour but frankly I wouldn't be surprised! Edinburgh SW used to be Malcolm Rifkind's seat and it's quite a prosperous area where many RBS and HBOS employees would live. Darling was originally elected in Edinburgh Central and moved over when the Scottish seats were trimmed following devolution. The Tories hold the equivalent Holyroyd seat of Edinburgh Pentlands quite comfortably. You can also expect the SNP to take a bite out of Darling's vote come election time so this will be one seat to watch come election night. No serving Chancellor has ever been unseated before, possibly history in the making!
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What's clear is that Government (ie Alistair Darling) was all over the deal that gave Goodwin £650k a year for life from age 50.
So much for improved governance!
At least it ends the debate about the so called gilt edged public sector pensions because if Government thinks that this private sector one passes muster all public sector employees can sleep easy.
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What were the managers of our pension funds doing????????
For those of us who own pensions we're losing twice!!!! Once as shareholders and again as taxpayers.
Henderson, one of those pension fund managers has 'moved' to Dublin so that it can pay less tax in the UK!
What on Earth were Blair and Brown doing??????
New Labour must go.... Brown and Blair must go to prison.
Call an election!
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The first taxpayer deal for RBS bought the taxpayer something like 70% of the company for about £20Bn injection (can't remember the exact figures).
This deal buys us 5% it appears, for a further £19Bn injection.
Can somebody put me straight on why this is a good deal?
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This comment was removed because the moderators found it broke the House Rules.
This is all going the wrong way. Has anyone else noticed the humbled looks from the Mandy, Mcnaulty and co. Normally bullish they all look a bit worried.
Here's why, it's what robert doesn't know.
1/ The unemployment figures for january and february are frightening.
2/ The banks have been pricing UK MBSs on the basis of an 18% fall in house prices from peak. In fact it's about 30% and expected to keep falling for at least 4 more years.
The above 2 combined mean the expected defaults on UK mortgages have multiplied, adding in the retraction in GDP and falling tax income, topped off by the end of N Sea gas in 2011, and it all means we are now beyond the govt's, and ultimately the economies, ability to cover the losses. So now we are in to a bluff. And that's what the RBS deal is, a bluff. The US economy needs to turn soon for the bluff not to be called. If not it's disaster.
By the way, rogers was right. We should have let the banks fail and picked up the pieces afterwards. A couple of weeks pain followed by concentrating our resources on our own people. That was sensible. The game we are in to now is way beyond our ability. This is a last chance gamble. All or nothing and the govts bluffing. Go figure that for competence.
Dear Labour, what is it going to take for you to rid us of this ship of fools.
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Why don't we all default on our bank loans and then demand a bail-out? Surely, the 25K I borrowed from Lloyds is peanuts compare to what we have gifted them!
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#98, wow, I thought 95%+ pass rates didn't mean dumbing down occurred. Are you really that innumerate?
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Further to Oldgroucho #92, the same poster appears at #139 long before earlier posts have passed moderation.
Writing under a nom-de-plume is one thing, representing a interest is another.
So Barricades, where is your allegiance? Are you a BBC or a New Labour insider?
(From your misspelling of "gauge", and lack of real substance, I draw my own conclusions and will look out for the key words that betray your ilk).
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"English bribes were a in vain
Tho poor and poorer we mun be
Silver cannot buy the heart
That aye beats warm for thee
Will ye no come back again?
by Carolina, Lady Nairn
Royal Bank (of England) in Scotland note!
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Moderator
Can you work on the earliest postings first please, not jumping ten at a time?
Thanks
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Today the British Bankers Association has issued a statement. No, it's not about saving the banks from ruin or the financial crisis that affects the global economy. It's their Statement on Bank Charges Test Case:
"The court has not said fees are unfair just that they can be looked at to see if they are fair or not. The banks continue to believe that the Regulations do not apply to these type of charges. The banks will apply to the House of Lords for permission to appeal the Court of Appeal's decision..."
Clearly no change yet in the priorities and attitudes of "the banks".
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HOW TO SOLVE THE BANK PROBLEM
The answer is simple.
Bank bosses should be held liable for their negligence and have their assets seized (eg, houses, savings etc). If we default on a bank loan then they come after our houses. It is reasonable that something similar should apply in reverse when they mess up.
It would also be good to see some of their smirking faces behind bars but that is just wishful thinking.
And finally - break up the banks, nationalise some and let the worst offenders go to the wall.
Cleanse the system.
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This comment was removed because the moderators found it broke the House Rules.
Let's get this straight, the UK record loss is £350bn.
By shifting £325bn of toxic assets to the "insurance fund" is really a write off of bad debts to be added to the £24bn loss declared.
The bank is broke and as it's owners the taxpayer should take control:-
1. Secure all depositors.
2. Appoint a receiver.
3. Take legal action against those responsible.
This will demonstrate that taxpayers are fed up with the incompetence of the government and bankers arrogance. It will
save the taxpayers billions of pounds and deal with bonuses, pensions and all that nonsense.
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And did I hear their ex-chief is receiving a massive pension from age of 50, (a) are we as taxpayers paying that and (b) how many of his employees are going to be paid off with nothing like that?
It is all totally scandalous and confirms everything we 'normal people' have believed about the banking world for years.
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91 JPWrighty1
I don't know that this pension of 650,000 is, in fact, not already pared down from what it would have been.
Someone like Sir Fred surely would have had a 'solid gold' pension. It would probably have been more like 1.5 to 2 million. It may have already been lowered to make it look better. And is this all he's getting.
All this dosh just for 'climbing a ladder' - not bad!
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This comment was removed because the moderators found it broke the House Rules.
Can somebody explain to me how RBS can justify telling the world they have 1.7trillion in assets when this was clearly a prebust (over)valuation. If most of their assets are linked to property and industry which has dropped in value by around 20% around the world, should this not mean that overall they should be announcing writedowns of approximately 340billion pounds?Are they just doing piece by piece?(because its going to take a long time)Next quarter another 24billion loss...I think that writing them off would be easier.
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It would be interesting if RBS were to itemise the £325 billion of toxic loans - where they are, loaned to who etc. The real prospect here is that the taxpayer could, probably will end up standing the losses made on a great number of loans to non UK individuals, companies. So that we by default could be helping prop up overseas companies even governments who have borrowed, then defaulted and now we're covering RBS losses on these loans.
I also notice that in every instance of more money being pumped into banking, for a government input of say £50b, the bank promises to increase lending by £15b. It seems that more needs to go to the banks for a lessor amount in turn to be lent.
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I've blogged this somewhere else, but if there is one group / individual standing for election on 1 manifesto pledge to bring all those responsible for this Financial meltdown in front of a UK jury, then they will get my vote. In fact I'm certain they won't lose there deposit!!
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#128 tigerjay
I wouldn't celebrate yet - large profit is made from charges levied on those seemingly incapable of keeping their accounts in order.
To replace these charges the banks will withdraw from free current accounts or start charging for everything bar the very basics.
How much are the charges to your business from ordinary activity like just paying money in?
So again as a result the prudent (those capable of running their accounts in accord with the conditions) will again get battered to support the imprudent who cannot.
This is a rare occasion where I have no problem with banks making charges provided they are clearly advertised and informed which reading the conditions on my new account they clearly are, eye watering but clear.
If we want the banks to pay back their loans to the taxpayer then profit has to come from somewhere - we don't want them making more from charging SMEs more in charges or interest or giving asset inflating 100% NINJA mortgages or speculative investments and imprudent loans
- so the cash is going to come have to come from somewhere.
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Those of you wringing your hands and demanding that the banks 'be allowed to fail' aren't living in the real world. Unfortunately banks above a certain size REALLY ARE too big to fail, the CEO's and directors knew this so thats why they took all those risks..
If you don't believe this look what happened when Lehman Brothers and Bear Stearns and Washington mutual went down the pan, thats what set off the bear market we are in now. When Congress refused to ratify the first bail out plan the Dow fell 700 points in a matter of minutes, every stock market in the world would be obliterated if the whole house of cards was allowed to topple. If you think that doesn't matter then how much do you suppose credit would cost for businesses with one or two players left in the loans market, that is for those businesses fortunate enough to be granted access to any credit at all - 20 percent? thirty percent? its just unthinkable.
Face facts, the big players in banking can hold the world to ransom and get away with it, all we can hope for now is that they are sufficiently well regulated in future to avoid a repetition of this current crisis.
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#143 - sorry the accountant in me demands that I point out that your numbers do not add up.
With regard to RBS losses & Mr Goodwin's pension - the media have now linked these two facts forever in the minds of the public - correctly IMO although there will be others who should be named and shamed too - Mr Goodwin is one of many. Do the public know where Mr Goodwin lives? I suggest any demonstrations should begin at the Goodwin mansion.
I agree with many other posters (#131 provides an appropriate list) that bankers, govt etc are all linked and cosy and seem to be taking part in some kind of protectionism of their own to the detriment of the working classes (I would describe myself as a middle class accountant but now know for a fact that in the New Order there are only two classes - the City class and the working class).
Can we set up a Truth Party on YouTube and get the ball rolling to win the next election for the people - sort of a democratic revolution - I'm in if anybody else is up for this - although the idea of trying to run the country when all this lot is going on is a nightmare!!!
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The government should use the M'Naughten Rule (a defendant is legally insane if he/she cannot distinguish between right and wrong) when examining the greedy and then take appropriate action.
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The whole pensions / bonuses row will go on and on. I suppose one simple (and therefore probably crude idea would be to exploit the fact that the government does at least control the taxation system. Why not push up the marginal rate of tax for very (very) high earners so that anything paid in bonuses will, effectively, go directly back to the taxpayer: 95% on anything above, say, £250,000 couldn't be mistaken for socialism, but it would mean we got most of that famous pension back. We could meet our legal obligations by paying all those contactually guaranteed bonuses, without actually paying out that much.
After all, if you can't be motivated by £250,000 a year, you're probably not employable anyway.
Is there any watertight way of discriminating between bonus and salary as far as tax concerned? Could you tax bonuses at a higher rate than a salaried income?
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there will be no enquiry into the corrupt nature that led to all these problems. the reason is that all those private school educated lot are all joined at the hip whether they are tory or labour.
if they refuse to divulge the minutes that led to the slaughter of hundreds of thousands of iraqis do you REALLY believe that they want anyone looking into their pet subject - capitol. after all the main reason for the war, remember, was monetary. the iraqis have suffered a lot more than anyone here losing a bit of money.
our leaders overlooked the crooked practises because they were all in a feeding frenzy. and anyone who raised an eyebrow was told to shut up and stop talking the economy down.
lets face it we live in a corrupt system marginally better than some third world countries. the only difference is thet we have rigged the world so that we enjoy a better life.
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if you don't give a
doggone about it
then they won't give
a damn
you've got to have
a job to put meat
on the table
you've got to have
a job to keep that
family able
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£325 Bn is a lot of loss for the taxpayer to bear. Realistically, what is the benefit to the taxpayer of taking that kind of hit? I also saw a headline the other day that the banks have been bailed out (on paper, at least) to the tune of the entire GDP of Britain. Why? At what point do we say, "If we hand over all of the money Britain generates to the banks, what is the material benefit to us now or ever?"? Banking is still only one component of the economy and when (if?) they recover, will we see enough benefit from handing over all of that cash to have made it worthwhile for the nation as a whole?
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#142 armagediontimes.
Jolly Jim and and "Doctor Doom" are part of the problem. They have been given far too much airtime to spout their naive nonsense and been allowed to talk their own books. They have contributed zero to any form of sensible debate. IMO we will get out of this mess as the required accounting changes are made. Asssets will be written back and the Govt will get its money back. It will happen quickly and as so often happens the likes of Jolly jim, T Boone, Doctor D and the legendary George Soros will go back in to hiding, dreaming about the one call they got right and bemoaning the fact that the world does not understand them.
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Has anyone else noticed there are less and less bloggers coming on here and defending the government.
Has Draper finally given up defending the indefensible or are there just too many blogs for them to cover now.
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Hi Robert
How did Sir Fred become Sir? If I recall a Knighthood is bestowed for service to Queen and country?
June 2004 - Knighted in the Queen's 2004 Birthday Honours list, for his services to banking.....unbelievable
In which case I believe Sir Fred should now become Fred, especially if we (the UK tax payers) cannot get his pension fund back into the public finance pot.
I rest my case.
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Well i think we begin to see that you cannot shore up an unregulated industry by giving them more money.
Gordon Brown will be looked upon by history as the man who led the united Kingdom into civil war, who bankrupted the country to save some of his banking chums, a man so ill suited for the role of Prime Minister he cant do right for doing wrong.
How much money have we now lent the disfunctional banking industry? How many billions?, and why on earth did the Government let the banks go to the wall?
Every time a Government Minister comes on TV they parrot the same thing "we couldnt let the banks fail"..... why not?
Im sorry i dont believe anything they say, are you seriously telling me that the cost to the country would be worse than its going to be as a result of this governments cowardice.
If we assume that all the banks collapsed and the government had to guarantee the savings of all the depositors up to £50,000 for each account and all the bank workers were made redundant, How much would that have cost the UK.
The amount of money the government is plowing into the banks could have been used instead as grants or loans direct to homeowners and businesses, cutting out the middle man, as it is the craven decision to allow this banks continue trading and profitering is going to tear this country apart.
Id just like to thank this Labour Government for destroying once and for all The United Kingdom, I would like to thank them for leaving my children and their children with high tax rates for the forseeable future, I would like to thank Labour for their quick reactions to a problem no one cared about , when issues this country needed resolving, Future energy policy, foreign policy, transport, Europe were neglected again and again.
I would like to personally thank Gordon Brown for showing us his ability to hesitate when he should act and act when he should hesitate.
On another blog on the BBC they compared Brown to Walpole, well im here to tell you brown aint Walpole, he's Lord North.
I am so angry, get this man out of office now, the whole party is a shambles, they had one good idea: the family tax credit and screwed up the implementation on that, everything else they have done for 12yrs has been a disaster for this country.
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I'm pleased to see that Robert wrote this article without using the phrase "toxic debt".
I've never liked the phrase at all, and I've only just worked out why I dislike it so much. I've always assumed I didn't like it because, as a scientist with more than a couple of toes in the waters of the pharmaceutical world, I am well aware that "toxic" has a precise scientific meaning, and that that meaning doesn't apply here.
But I've just realised that there is a much more important reason why I dislike the phrase "toxic debt" so much. It's because it's a euphemism. We really don't mean "toxic debt", what we actually mean is either "debt caused by gross negligence" or "debt caused by fraud" (and far be it from me to speculate on the proportion of the debts in each of those categories).
So how about banishing "toxic debt" from future BBC stories, and telling it how it is instead?
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I think Fred G's pension is obscenely huge, however if that was his contract, then he gets it. I hope he voluntarily reduces it but it would surely be wrong for this to be pursued to the courts. I imagine FG will win and tax payer will get huge legal bill.
I assume Brown will, when he leaves office, give up his pension (or part of it) because he will have left UK plc hugely in the red?
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RBS was a global bank and a very high percentage of the losses were as a result of the Dutch ABN Bank acquisition. That means the UK tax payer is now supporting broken banking services in 54 other countries.
How about the following:
- Close down the the services the new RBS 'Non Core division' immediately (the 54 other countries!) and refuse to use UK taxpayers money to keep them afloat.
- Take Sir Fred to court and recover any bonuses and pension pot
- Get off the back of UK RBS Retail Branch staff, who did NOT make a loss last year and are vital to make sure the UK taxpayers get their money back as RBS retrenches back into the UK.
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Woops! If you have any money in RBS now is the time to get it out. Peston is commenting therefore the end is very close.
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117 bletuscu
Impossible for Gordon to let the banks fail because his chums are running them and the rest of his cronies are squealing at him for support because they also don't want to go to the wall.
Trouble is there are too many of them to save and no one wants the short straw!
Appealing to the Government to act for the good of the country is frankly niave - do you really expect this Government to act 'the good smaritan' hasn't their performance of late shown what they think of this country.
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Why are we trying to prop up these failed institutions anyway? They gambled: they lost. end of story. If the Government is serious about economic recovery then they should arrange to buy buy long-term (25-year) bonds from the mutual societies and the Co-op Bank. These can then begin to lend in a sensible and sustainable way again. (At the moment they are being forced to stump up for the losses of the greedy bankers). People with savings can move them to the mutuals to increase their lending capacity and grow their business into the holes left by the big banks. They toxic banks can then be left to sort out their toxic assets as best they can. Those that are now Govt-owned and survive can then be re-mutualised (not re-privatised). It is no co-incidence that all of the demutualised building societies have failed, meanwhile the mutual sector is almost unaffected.
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If ever there were a case for a special Act of Parliament to re-write (sloppy) regulation and practice retroactively, it is here.
Few MPs would dare vote against it.
It would send a TOUGHER MESSAGE than a voluntary waiver of all pension by FG, and should be extended to several others.
It is an essential pre-requisite to get voters' tolerance of the highly urgent support for banks' operations.
Retroactive legislation is bad in principle but it has been used now and then by the government e.g. against my moderate final salary pension !
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Just an experiment to see if the tech monkey has fixed it yet...
This jape is wearing thin
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Would the chief of the defence staff kindly nominate a a reliable, senior officer to take charge of affairs until a general election can be rapidly organised.
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#69,waitingforthepain: "So we lend them 19bn so that they can pay us 19bn for us to take on a potential liability of 325bn. We get to charge them a fee of 6.5bn but, since they don't have that we get to lend them that as well!"
The way I read it was more more like . . . we insure them against the risk that their 325bn pile of rubbish isn't really worth that much - with a 19bn excess. But - because they can't afford the 19bn excess - we will GIVE it to them UP FRONT! They can't even afford the premium either but they don't need to worry about that - they can pay us as and when.
If this new form of insurance "product" was available to all there would be a stampede!
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It is interesting to think about the scenario where the bank was allowed to go bust and depositors lost a proportion of their savings. Who would win and who would lose?
Suppose it costs £200Bn to 'bail out' RBS taking together all the diffferent schemes and assuming it gets a bit worse out of a £2Tn balance sheet i.e. 10%.
The 'capitalist' solution is to put the company into administration wipe out the shareholders (which has already happened) and then the depositors lose (say) 10% of their funds and are handed shares in the 'cleaned up' bank in compensation.
The 'socialist' solution is to pretend the bank is a going concern and pump in £200Bn of taxpayer money. This obviously benefits the senior bank employees because their employment contracts stay in place. Trying to keep the bank going also makes it difficult to aggressively investigate its previous behavior so potentially guilty people get a free pass.
The interesting thing is that the people with the biggest bank deposits are not the same as the people who pay most tax. A small fraction of people own most of the wealth and therefore have most to gain from saving the banks. There are also foreign depositors - fair enough to protect them if their country also protects UK deposits in their banks but what about Russia/China etc..
I suspect that the average working person wll pay more in tax to bail out the banks than they would lose if their bank was put in administration and 10% of their savings was written off. In effect younger working people are subsidising the old and the rich.
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If it's any help Mr Tech Monkey, I think that you pressed "always allow" rather than "allow" on your multi faceted and LED lit control panel, although I'm not familiar with your blog software
Can you turn it back? Is there such a fail safe?
Since it'll take you an hour to get to this message is there any vacancies as moderators? Can you work from home on variable hours?
It is nice to have the immediate sense of reply, but I find I have to wait at least an hour to get a reply
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If the banks eventually have to be nationalised please god let it never happen under a labour government.
Growing anger is an understatement for what we are seeing.
Explosive is more apt.
So if they ever did put these banks to right what would the taxpayer get for them. A few billion? Not even enough to pay the interest charges.
What we are being told about is only the tip of a massive iceberg and what is still underneath is too horrifying to contemplate.
The only way we will ever find out is when Gordon Brown has the guts to call a general election and someone else will be able to see the true extent of what's in store.
It now has to be sooner rather than later for every day that goes by leaves less time for the big clean up as the pile of rancid fallout just grows and grows.
They need not worry. The general public want a general election now so they can have the satisfaction of kicking out this deceiptful and useless lot. It would be a welcome distraction.
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WHERE IS CURZON?
WE NEED A
BLOG
OR POST
THAT ASKS WHEN
THE PROSECUTIONS WILL START
Robert WHEN WILL THEY START?
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i've got something to say
i've got nothing to prove
i'm living day to day
(damn) can't see the future
what more can i do
so come what may
see it's more than pay
it's where my head lay
i've got nothing to say
i've got nothing to do
but what i came to do
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Hi
Do I care how much we might need to prop up the banks any more.
Another day another billion or so
Could I suggest that we pay executives bonuses/salaries/pensions in actual/real monopoly money ? It would keep the games company in business, and as we could use the £500 notes shouldn't use up too many trees either ????
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173. At 11:57am on 26 Feb 2009, glanafon wrote:
Another day another boring banking business, as usual, topic. ..... Does anything outside banking exist. Does anybody care.
___________________________________
Dear Gland,
Yes. We all do; because affairs now actually threaten our survival in a way that has not been previously expeienced in most of our lifetimes.
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dont particularly want my details published but happy to talk/discuss with you.
Nothing has been said about the fact that NatWest Bank - my particular area mortgage services - had credit scoring. Mortgage services had an Automated Decision Support system and workflow. This ADS system would run the application through Experian and one other company for status on white black and grey data. After this credit scoring would be applied, after that a whole set of mortgage related "rules" would be tested against the application. Should the mortgage pass it would be agreed and sent through without manual intervention. If there was something slightly astray it would be referred for manual assessment. It it didnt meet criteria it would be declined.
When RBS took NatWest over it made NatWest get rid of all this technological assistance to ensuring the loans taken on were good. It sent NatWest back to a paper file system and manual assessment.
Dont know if that is of interest to you. But it definetely adds up in my mind as to how such dodgy loans could be taken on.
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Now stronghold barricades is touting for business, this is all very disconcerting.
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Ahh Robert
I see you and your fellow apocoliptic lemmings are in full flow!!
Yes there has been another bailout...but not of the same type so they are actually trying something different at least they are doing something positive...unlike Robert and his fellow Pestonians!
In addition is it insurance it is in a way but rather than worry about £350 Billion and the amount of losses do you not understand if there were those kind of losses we would be a a depression greater than that of the 30's!! (Don't worry about RBS all of us will be in trouble no matter what your job/role)
Of course you don't your all still worrying about being right and the first to be able to say I told you so AFTER the event!!
Wake up and look at the other side of this coin! IF they do not make losses greater than 10% we pay nothing and when eventually the downturn ends and we begin our upward (if this occurs) trend profits return and the tax payer can have it's money back...
But don't believe that that is far to positive an outlook and you Pestonians are far too worried about your short (positions) term outlook on these banks.
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Re #222 Strongholdbarricades
Do moderators work from home ? and if so how do I apply ??
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@177 Mark
"Here's a question for anyone complaining about Gordon Brown's role in this...
Just how loudly would you have screamed if he'd have taken drastic action about five years ago to reduce the sort of activity that RBS (and other banks) are now being castigated for?
I can just imagine the incessent whining we'd have had about 'Stalinist overregulation' of financial services - and the complaints we'd have had from the city about how Brown was reducing our competitiveness in the global marketplace with his red tape."
Well at least then he would have been proven right in terms of no more boom and bust and Prudence and would have a reason to look smug.
Now he just looks smug which makes him appear pathalogical
Now he he the reputation for letting the banking system to go to hell in a hand cart.
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I must be missing a trick here...
Under this new "insurance" scheme, the first £19.5bn is, in simple terms, the excess that RBS has to swallow, the rest the tax payers stumps up.
But actually since we own 70% of RBS, we are also stumping up for 70% of the excess!
So in effect other shareholders only need to stump up £5.85bn out of a total £325bn possible claim. That's a brilliant deal for other shareholders. We should try it with our car insurers the next time we have a little bump on the road...
What it boils down to is this... Does anybody in our government have a backbone to negotiate a decent deal for our hard earned tax pounds? Or should I join the que and seek Alistair Darling's cash for myself...
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This government is persuing one policy which is to return the economy to the status quo
back to boom and bust
back to what we have been enjoying for the past ten to twenty years.
In this policy the government are taking a massive gamble with taxpayer's money.
I think this is on a par with the massive gambles bankers took, and lost, with our savings and investments.
Let us hope the gamble pays off and stability returns else we will not only have lost our jobs, homes, savings and investments, we will also be paying the cost of the governments gamble for many years to come.
Let us hope that when stability returns strict measures will be taken to better regulate the system so we never experience this fiasco again.
Were any other strategies seriously considered other than bailing out the banks?
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Hate to see all of this Scotland v England stuff about banks, much of which stems from confusion. Here is a simple guide.
The Bank os Scotland was founded by an Englishman in 1695, not long after the Bank of England was founded by a Scot.
Partly because the Bank of Scotland was suspected of being over-sympathetic to the Jacobites, the Crown encouraged the emergence of the competing Royal Bank of Scotland in 1727.
The King at the time (he died in 1727) was George I, who was German, and didn't speak English.
Hope that helps.
Just in passing, wasn't it Samuel Johnson who declared that "Nationalism is the last refuge of an eejit?"
Or was that Rab C Nesbitt talking about patriotism?
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#185
sure the numbers add up (you can argue the premise for sure but it's illustrative not definitive).
The spreadsheet I used came from RBS, do you think it's broken?
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Rahere
37 point 4
Shurley shomeone ish shuggesting
a fancy way of saying Sterling has fallen off a cliff so the sterling equivalent of foreign currency earnings are a bigger number.
As I am sure you will later point out it conveniently ignores the FX write offs will also be a bigger sterling number and I suggest a MUCH BIGGER number.
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Nothing new about failing bosses getting large pensions: http://www.telegraph.co.uk/news/uknews/2403928/Data-loss-HMRC-boss-gets-137k-pay-off.html
This practice only leads the public to the view that all civil servants leave the service with a gold-plated pension, but for most of them that's certainly not the case.
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Mr Peston, throughout your singularly unimpressive and frustratingly delivered coverage of this fiasco, you have steadfastly endeavoured to accentuate the negatives. I will point out to you it is equally valid to state share prices can rise as well as fall and that it is alarmist and grossly irresponsible to infer that all public money being employed in keeping the banks afloat should be written-off. Whilst that may ultimately prove necessary, it is very far from definite, so some realistic, objective and responsible reporting would be a welcome change.
As far as the hysteria concerning the pension pot is concerned, why did you not leap up and down months ago? There is no excuse, particularly from one with special insight, that the scale of the losses today somehow crystallise the problem as solely Fred Goodwin's creation, nor can you claim today's losses are conventional. Everything, including the kitchen sink, was required to be written-off as a condition of the original "world-saving" bale-out plan and this is it merely being confirmed. Most journalists were aware of the likely scale of the losses a long, long time ago. Should questions not have been asked about Goodwin's remuneration during the transition to a new chief Executive?
If Fred Goodwin should not keep any further remuneration as a consequence of his actions, why should Gordon Brown remain in office? The RBS buck may stop with Goodwin, but the buck for the economy stops with Mr Brown. It is dishonest to say this is not a British problem, as proper regulation of British banks could easily have reduced the impact. It is also dishonest to absolve the British public of all responsibility, as reckless consumerism is a major contributory factor. Please either give us the true story or say nothing at all.
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The ****** (sorry, meant moderators) of this blog have advised me that I can re-post my previously edited out comment if only I remove anything that might be considered defamatory.
Well, here goes:
"What has the world come to?
We now know that all the complimentary things ever said about £$%@ were lies/wrong.
But to discover that even the insults were false, well that's something else!!!
So not £$%@"Master of the Universe", not £$%@"the Shred", so what then?
Maybe £$%@ the ex-megalomaniac who should be made to pay back his millions, and who should go to **** for criminal negligence and misleading investors, etc? But he never will, will he?
What do you call that?
"Lucky" £$%@, if you ask me..."
Hope my post makes it now....
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#166. tommyboay wrote:
#68
Dangerous precedent methinks. What would we rename the UK's oil resources?
--
Well I think the fairest description for the "UK's" oil would be...
Shetland's oil - don't you think?
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The stock market actually rose this morning!
Pure madness.
That there are still cockeyed optimists out there suggests that the slump in stock market values has further to go.
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#171:
"In these difficult times, if we the public could change someone else's name by deed poll, who would we choose I wonder, and what to?"
Maybe Crash Gordon should change his first name to "EVERYTHING I TOUCH TURNS TO"
He can keep his surname as BROWN
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Just bounced over from the Goodwin pension whinge article....
I agree all this is just silly (various blogs) it's beyond satire and virtually beyond comment...they seem trapped inside events now.
Having said it's silly...what isn't silly , is the massive crashing that's occurring in the real economy right here, right now...even the traffic on the commute is lighter.
I run a couple of small businesses and while obviously one can find some businesses (Bailiffs, people who Board up broken windows)who say they are doing okay...broadly speaking I don't know of one business that isn't just "feeling the pain" but is passing out.
If the jobless figures are not massively above expectation I just won't believe them.
The govt could make examples of the twenty or so greedy bankers... and indeed doing that might do more to change the atmosphere and restore confidence than any number of badly thought out arcane 'initiatives'...
PS to the person asking why non-voting shares?... (It's truly pathetic!..but it's the only device they could think of to stop us having so many shares that they'd be forced to take over the Bankby offering forn the rest...which would then show up what the rest of the shares are worth...either £00.00 because they wouldn't want to risk tax payer money...or £xx.xx because they wanted, via some doubtless obtuse reasoning, that 'Banks' did retain value, and this justified chucking yet more tax payer money in..
Making this point is pathetic on my part.... You own 50% and one share and boy...you own and control that Bank...the entire frame of the 'who owns the Banks' debate is totally bizarre...
Either another will get into trouble and force the issue or the Americans will nationalise Citi... which will create the discounted view that we'll do RBS and Lloyds so...'forced' to do it then they'll do it
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The only other person in the universe more overpaid than Dick Fuld and Fred Goodwin is...
the moderator of this blog!
Unless he/she is doing it for free.
But even then, he/she's clearly overpaid....
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With unemployment rising so quickly and tax receipts down, how long until the country is bankrupt and can't afford to pay benefits etc?
Well, you could argue we're already bankrupt I suppose with the lack of prudence on the part of Brown in giving so many billions away to the banks.
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Aaaarrrggghhhhh !!!!!!!!!!!!!
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If these people were in the armed forces or police they could be fired WITHOUT PENSION.
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The anger of the public is monumental. There are very few people that agree with the decision to bail out the banks.
I'm just about to make it worse....
Consider this:
The BIG plan is to lend these banks money, so they can pay it back when better times are here. However if you consider for a moment where this wealth is going to come from - you will realise this is one MASSIVE STEALTH TAX HIKE.
The only way the banks can pay this money back is when they lend money to the public again. That will mean for a long time there wil be a much bigger difference between the central bank rate and the best you can get in the market.
WE WILL BE PAYING BACK THE MONEY THAT WE LENT TO THE BANKS.
The whole thing rests on the premise that the public play ball.
...but who's to say the public will have the thirst to borrow in such amounts again? Any logical member of the public will be very wary about borrowing again.
In addition to this, the number of bankruptcies will reduce the potential lending market further still (bad credit ratings).
So to re-cap.
The public are going to pay back the money that the Government lent to the banks, in a dwindling market and the expectation that we will be even more keen to borrow than we have done in the last 10 years.
This isn't a plan - this is financial suicide.
Put it this way - would you lend money to your struggling local corner shop so that he can stay in business and pay you back by charging you more for the goods you buy from him in future years just so that he doesn't close (because you might have to actually take over running the shop yourself)?
THAT'S WHAT YOUR GOVERNMENT IS DOING - IT'S GONE BANANAS!!
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Well isn’t it nice that Mr Fat Cat Banker from RBS is getting a FAT-CAT I’m not a twt weekly sum of £12500 to ease the strain of his recent unemployment.
Unemployment can be a very harsh experience as I am already beginning to find out for myself. I would suspect Mr FAT-CAT RBS Banker man will have to tighten his belt a little just as I have to do, at the moment.
So it won’t be a surprise for you to learn that I have a lot of sympathy for the man, as we now share the daily concerns of “how am I going to pay my Council Tax”, or “Where am I going to find the money to pay my next energy bill” or " How do I pay my mortgage" or “not to worry at least I have relatives that will give me the odd meal should I require it” or “Sorry Tabby I have to board up the cat flap and lock you out cause we have run out of Kite-kat food. No, Indeed I understand entirely the agonising Mr Fat-Cat must obviously be going through at this particular time.
So, ok, I have had my pension frozen but that isn’t a reason for me to begrudge Mr Fat-Cat his now is it. Yes, Yes, I know he is as well as his friends are responsible for me losing my job, but come on now, we mustn’t be bitter, as I am sure he suffers as we do. Let us instead show some charity here. No, no, not for me, because my weekly pay out is £12440 less than Mr Fat-Cat Banker, let’s have a little bit of charity of spirit knowing that Mr RBS Fat-Cat is suffering also.
And let’s not forget that when we are both back in work, we will both be making contributions from our earnings to pay for the government bail until we retire.
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168
They are non voting shares so the government, on our behalf as taxpayers, is only a sleeping partner of course.
And as you can see, the government is pretty good at sleeping on the job.
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Its all very well going on about how much the Bank Bail-out might cost taxpayers but the near collapse of the world financial system since the US authorities decided to let Lehmans go under hints at the costs of not doing something like this.
In any case, these are not all "toxic" assets; they are assets which are impossible to value in current market conditions. Getting the financial markets
moving again is the only way we are going to avoid depression and wholesale unemployment.
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#128
Banks subsidise free banking (yes it does exist for most people) from the monies they make out of "free" current account balances. With base rates at 1% and likely to go to .5% next week, they are losing profit hand over fist as the income they traditionally received from this has all buit vanished. If the income from overdraft charges is reduced then they are in even more trouble with the following results:
1) the time it takes them to pay us back will extend by many years
2) we all end up paying a monthly or item fee (or both!) to have a bank account, just like they do everywhere else in the world
3) shrinkage of the branch networks to cut costs
4) more job losses on top of the 30k plus due from HBOS and the 25k plus from RBS
5) the tax payer will have to pump more money into the banks we now effectively own (ironic really that we end up paying out to people who couldnt manage their finances)
6) the financially responsible end up paying for other people's mistakes
7) tax revenues go down as the income drops and banks set off the payouts against profits and we end up paying even more tax in the future.
8) and just for those who do pay lots of overdraft charges, the chances are the banks will start bouncing more of your items as there is nothing in it for them anymore!
So, lets not be so smug about this development as we will all end up worse off. Surely the current crisis shows that they always win in the end?
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173 Glenafon
I would rather have a full bottle in front of me than a full frontal lobotomy.
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207. killthehedgies
I don't understand your objection to Mark to market accounting. Maybe you can explain?
For example if I wanted to re-mortgage my house, should I quote it's value as being the figure at the top of the market when it was bought (not actually true). And then ask for a LTV on that basis?
In my simplistic view - a business cannot claim an asset is worth say £100 million if through circumstances, they were forced to sell it and it would only realise £10 million on the open market.
Is mark to market not more honest and does it not stop a business from overvaluing itself and artificially boosting its stock value etc..
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#207 killthehedgies
I don´t know you say no-one could have foreseen the problems. I tell you some of the people who did foresee the problems and you tell me they are the problem because they told you what the problem was.
Do you notice the canyon sized gap in the logic?
As for accounting changes - Enron are an example of a company who thought they could change reality by changing accounting treatment. Perhaps you thought their shares were a bargain as well.
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These guys have been negligent in their actions.
They bet large, and were lauded as hero's and kept betting, until the deck finally turned on them.
They were a bunch of gamblers, not bankers.
The scandal is that Brown .. who did nothing to curb their credit fuelled expansion (the same chancellor that eradicated boom and bust from our economy!) ... and the rest of the banking buffoons will not have to face the music for what they have done.
The directors should all face charges of wrongful (if not fraudulent) trading and charges of negligence on behalf of their shareholders (us lot via our pensions).
It's some kind of sick joke ... these guys had their snouts burried so deep in the trough they couldnt see the dangers ahead .... and they will all sail away free into the distance on their gold plated pensions.
They should be stripped of their ill gotten gains ... when you reverse out the losses against the previously reported profits (sic) ... should they have received anything other than a a size 9 boot up their backsides ?
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I wonder what happens to these bailout deals when the IMF come knocking?
350Bn today for RBS, it will be an equivilant amount tomorrow for the other Scottish bank that Lloyds were bullied into buying.
surely it can't be too long before the countries that the UK owes money to come asking for some back before Brown squanders it all. On that day we bust and the IMF will send in the bailiffs
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This country needs a revolution.
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Obviously the banks are in charge of the gov't since it is them who conjure up fantasy money. But let's not just blame the bankers, for they are playing the system and they've done it so well up to press. Let us not blame the FSA or Brown or even King either....NO, the REAL culprits are the hidden, the ones we're not allowed to know about, but some of us DO know of them.
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~165 jd6969preston
You wrote- "This Govt must be playing us all for fools".
No. They - just like the banks - are playing us all for being powerless to do anything about it all.
Basically, it's a "we've got the money, the legal and military might and the political power - so what are you going to do about it?" kind of thing.
Not very nice, really - is it?
Blogs like this may have a therapeutic benefit of allowing people to let off steam about it, but all the postings in the world on here won't actually result in any reduction in the magnitude or complexity of the mess others have put us and our families and communities in. Nor will they reduce the pain of bankruptcy, redundancy, home repossession, etc., etc.
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#200 citygambler. Yeah the banks are pretty big - but like everything it´s a matter of comparison.
The Soviet Union was a lot bigger than the biggest of the big banks. That failed.
To big to save is more likely the correct postulation.
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From an absolute perspective of the definition of a 'Bank', this is actually fraud?
Let's see, we put our money into the Bank for safe keeping on trust that they will look after it. But they not only lose it, they lose billions more that they never had in the first place by speculating! Now apparently, not only do we swallow the bitter pill of losing the money, we also lose the value of the money we do still have, as we kill our economy to bail them out!!
You couldn't make this stuff up!
I can't be the first to have realised that anyone now opening a 'real and sensible Bank' in the ture definition of the idea would clean up in an instant! Does such a thing exist at the moment? I doubt it - but in future such a Bank will be the only thing that people will trust after this.
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blefuscu wrote:
The irony of your post (which you are oblivious to) is that RBS was set up as a pro-Union Hanoverian iniative to counterfoil the pro-Jacobite Bank of Scotland.
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It would be really interesting to see some analysis of what these £300bn of toxic assets actually are, where are they (i.e, are they held in UK, US or wherever) and, even better, some assessment of the probability of them turning out to be, let us say, utterly worthless. As for te premia being paid in caopital instruments RBS have just created, words fail me.
Why not just put the 'bad bank ' RBS is creating into liquidation? Even better, can Lloyds not do the same with their bad bank, i.e. HBOS? Doubtless p[eople will say that would undermine confidence in the system, counterparties etc but who has confidence in these banks now? There seems to be a merry go round of banks / finance companies lending to each other on dodgy security, with the taxpayer carrying the can
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56. At 09:26am on 26 Feb 2009, onward-ho wrote:
This is great news today .... these so-called toxic loans will turn out to be not nearly as toxic as has been feared.... rebounding share price is also great news.......things are now beginning to change for the better.
______________________________
Dear Onward Ho Ho Ho,
Please. I fear for your health. Go to your room and lie down. You really must take your medication as prescribed.
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The government clearly intend to provide almost unlimited support to city of london interests, including the banks.
This will have three results;
a) there will be no funding on any scale left to support the rest of the economy
b) future taxpayers will have to foot an extraordinary bill (on top of existing PFI liabilities etc) and
c) a viciously opportunistic cuckoo-in-the nest (city of london financial interests) will have been created that knows it will not be allowed to fail, however badly it performs (and it cant have done any worse).
A government that really cares about its people would have allowed private sector disciplines to operate, the banks to fail and then bought them up at their (low) market value and run in the national intererest, leaving substantial amounts of money to support the rest of the economy.
Instead we will all end up paying vast amounts of money not to support the real economy, that might be worth doing, but merely to reduce the losses suffered by the banks and other city investors, which is a disgraceful misuse of tax revenues.
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completely agree with comment number 1
thats all i need to say really
sooner the government gets on with nationalising rbs the better
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Now we have "virtual" money oozing into our lives. Part is technological progress and part is greed. However, I do not know the ratio.
At the age of nine I remember being taken by Mr Robertson (general manager) to the bank vault of the National Commercial Bank in Gordon Street, Glasgow. He asked me if I wanted to count the stacked notes. He said he would come back for me in a few days! Real Money.
From the time of that visit 50 years ago until today I remember business success stories that are due to the accumen and customer trust followed by Mr Robertson and other managers of various financial institututions.
So where did we go wrong?
GREED & ERROR OF JUDGEMENT!
The big corporate deals must surely account for the majority of bad loans. The 80:20 rule comes into play.
For example, if we look at all business deals above £1m we might find that 20% of dud deals account for 80% of the value of write offs. Due dilligence!
Hey all, let's remember that we do have many good, intelligent and savvy banking folks who well satisfy client requirements and do meet realistic targets. These are the troops, soldiers and leaders. You need troops to fight the battle.
The Generals lost the plot.
Let's give them breathing space!
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Nationalisaton would mean we tax payers are still liable for unlimited losses-the best option, as others have said, was to close down RBS and HBOS while guaranteeing the depositors-This would have cost a lot less and limited our liability.
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The public will be entitled to know who will be benefiting from their billions.
Who it is who took a loan, and cannot repay (so leaving us to pick up the bill - courtesy g.brown).
We must be assured that those who cannot repay are not living it up on 600,000 a year pensions -- if they have a penny left, then it needs to be seized to repay us - the tax payer.
Will we be told who these people are?
I home none of the missing billions were spent on entertaining Mandleson on any of his secret liaisons.
By the way Robert -- you were very well informed on oleg/osborne -- are you ready to present what you know of oleg/mandleson?
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@£5416 for every man, woman and child in this country, we should have just let RBS and HBOS fail. Proably only a fraction of the bialout money is needed to compensate RBS and HBOS retail depositors.
It is puzzling why this governement did not consider the bottom-up tactic by giving us, the taxpayer, a direct say in how the money are handed out. We, or every taxpayer can be given the money/vouchers/... and put it into the bank of our choice. or to spend it, or a reduction on income tax ...
The governemnt hand out such vast sum of OUR money, so readily, in our name, without our consent. We will then have to BORROW back our money and pay the reckless interests! Who are the public servants serving ?
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#24 pavlov2009
someone really said that?
Did they consider that we can actually live without electricity to our homes?
Sure, life would be different, but we did it before and we could do it again.
The idea of us NEEDING the banking system is a load of rubbish.
I could manage without electricity at home much easier than Fred Goodwin could.
I say - let's find out - let's call the bluff of the banks and see how bad it really gets.
I believe that without banks, whilst things would be very different - it would not be worse than it's going to be for the next 20 years where we're kidding ourselves that the 'growth fairy' will re-appear so we can all get paid back.
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214, lordlairdie: "Woops! If you have any money in RBS now is the time to get it out."
Got mine out yesterday. Queues forming soon? Mind you, by the time this clears moderation the branches could be closed.
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FAILED
The BANKS have failed us
The GOVERNMENT have failed us
The FSA have failed us
It's time to take matters into our own hands.
SEE YOU ALL ON PARLIMENT SQUARE ON 1ST MAY 2009 WHEN WE SHOO THE RATS FROM THEIR NEST.
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As my earlier post broke house rules - no idea why. I'll try again.
Most, if not all, employment contracts have a 'gross misconduct' clause . Surely a good lawyer could invoke this clause and refuse to pay anybody concerned a pension.
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THE DARLING DILEMNA
How can the tax payer own 79% of RBS and 42% of Lloyds group and.....
...THEY'RE STILL CALLING THE SHOTS!
So much for shareholders taking control and more interest.
Seeing as most of the people on this blog, in the street and in the country are now shareholders of RBS.
THEY DON'T WANT FRED TO GET A PENNY.
Their wishes are being ignored.
So much for justice.
So much for respect for the law.
All the rules are changing - there will be a day of reckoning.
Where are all the lawyers?
Where is the law?
Is it merely there to protect the Goodwin's of this world?
In which case - what good is it to us?
The Government has opened up a contradiction in our society that will not sit well with the people.
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The injection of cash into RBS is the official start of Operation Re inflate The Bubble, this extra money is not just to get the banks lending at 2007 levels again, its to get the total ammount of credit in the economy back to 2007 levels again. The thing is where are the regulations about responsible lending that were supposed to go along with this money? What are peoples personal credit limits in this brave new age? Both the government and the banks are very vague on this point and I think its because the whole point of this extra money is to provide those risky loans that the banks will only consider if their losses are underwriten by us taxpayers.
The BBC and other media employ enough reporters to ask these questions and as its now our money at risk here we have a right to know the answers. The one thing we do know is that there is no end to boom and bust so 10 years after we come out of this downturn we will be in another one, so if the banks lend recklessly now because they can not loose any money, incouraged by politicians who just want them to lend to anyone, we could be underwriting a real mess for ourselves in the future.
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220 et al
Yes it looks like a self certified, 125 per cent mortgage secured on a self valued garden shed, does it not?
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#54 hack-round wrote
"Surly its time to get some people who can think outside the box looking at some alternative ways to do things given some space and collaboration they may really find a better way."
I completely agree - 100%.
However the reason nobody in Government is looking for alternative ways of doing things - is because they all benefit from the current system.
Time for the people to take control.....
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I have a number of observations about how the banking crisis has unfolded.Firstly when the news broke of the problems HBOS and RBS were experiencing Alec Salmon robustly defended both Scottish Banks (HBOS & RBS)and their management, hailing them as Scotland's finest. At the time he blamed the US for starting the crisis and dragging down these fine Scottish institutions whilst rejoicing that the Scottish HQs of these banks would not be closing or shedding jobs ( jobs relating to the Halifax in England were to be axed). Surly our friends North of the border who wish to see an independent Scotland should consider bailing out their banks as the independent Icelandic government has had to try to do. Or maybe Alec wants a fully independent Scotland funded by England.
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From a financial perspective it is depressing and embarressing to even be remotely linked to these banks.
The scale of corruption at the top where individuals are milking the good will of not only their customers but also their employees is just so significant it beggars belief. Even to the point that many of them were tryingf to get us to buy more shares just before things went so wrong - I have friends who have been totally spanked by the HBOS issues... leaving them with little or no savings left after years of working hard.
Oh and by the way GB I've made rather a bad investment in buying some HBOS shares.... any chance you could get my tax payer peers to buy them off me?
Will the last person leaving the UK please turn the light off... Things have got so bad even our eastern european buddies are coming here any more! Whatever next....
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244
IN THE LAST DAYS.............
I TOO DONT KNOW ANYONE NOT SUFFERING. JUST HOW MANY OF US ARE OUT THERE "ON THE BRINK"
GONNA FIND OUT V.SOON !!
SOD THE BANK TALK - ITS DONE !
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#142 armageddontimes
Spot on.
It was predictable without hindsight - nobody knew exactly when it would happen, but most people knew that it would happen.
Just to satisfy the non-believers. I'll make a prediction here and now.
The results of the bailouts will go one of 2 ways - we will see which one by the end of the year.
1) The bailout saves the banks but the confidence is gone, nobody wants to borrow (no matter the price) and we go into a much needed deflationary period for up to 10 years. It will be tough and enterprise will be severely restricted. We may even see a reluctance to use money as an exchange tool - instead gradually using barter to trade goods and services.
2) The bailouts work - the banks lend again, the public re-gain confidence in the banks. Then the economic flywheel will get up to speed. The Government and the regulators will be so busy patting themselves on the back that they will forget their promises. The banks will go back to their business as usual and will be forced to lend to people who would not be eligible today. It's either that - or don't lend at all.
Between 2019 and 2025 there will be the mother of all crashes. It will be global - and China will be in as much trouble as the rest of us (if they continue to head down the free market road).
I wouldn't want to still be alive for that one - it will make this depression seem like baby food.
One of these two WILL happen. I believe the Government is hoping for option 2 as it will allow them to ge through the next election - however it's merely saved it up for a later day...
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Re #217
For the avoidance of doubt -
It is right to crack on with the rescue package very urgently. - The key point is that firm action on the FG pension etc. would then allow the public to accept bold rescue action.
I support a special Act of Parliament to cancel FG's pension - and would include a claw-back of his entire package for the last 4 years.
This would make his position more like that of a partner, retrospectively.
Going forward, that would be a fair precedent to set, in such a very extreme instance - against gross, egregious recklessness
- and nail the future risk of moral hazard.
If the risks that triggered this mess were 'once in a century' ones, (ha!), what's wrong with a once in a century requirement that FG and some of his peers are treated like the disposessed and the misled ?
Mervyn King has said avoid vengeance.
- This is merely justice.
We must dismiss the Nuremburg defence now and act against those who took us into this mess.
Otherwise, the axe falls on the politicians, regulators & BofE men of the last few years.
Alternatively, we could re-instate FG's pension etc. if the rescue works - AFTER the taxpayer, and all the other stakeholders have had their positions re-instated.
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The one time I went to Natwest for help there answer was (albeit a polite) No. Why am I being forced to bail out these ungrateful greedy pigs??? they have cost me a fortune and proved to be a corrupt incompetant shower .it sickens me to see them profit from my misfortunes and then I have to pick up the pieces when their incompetance shows that like the Emperor they have no clothes!
This must be the biggest vote loser for gormless. The sooner some one whispers in his ear.."Drop the dead donkey" the better.
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Listening carefully to pmqs and news bulletins I cannot escape the impression that no-one has the slightest idea how much anger there is 'out there'. I don't hear anyone talking to ME. Endless excuses, reasons why I have to pay, reasons why some banker doesn't, slosh around. I feel completely abandoned.
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211, Bang On - I had those very same thoughts!
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RBS is far from the first major corporate disaster which has seen the CEO stagger away under the weight of his severance package. What about GEC/Marconi and another knight, George Simpson? Perhaps there is a now not so exclusive club for these thick skinned souls; one in which they can gloat about the messes they have created and walked so profitably away from?
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There were few artists impresssions of KING CANUTE in the 11th century.
i've often wondered how he must have looked. Staring out at the waves and telling the tides to turn back.
Today Alaistair Darling had the look of a man who realises that whatever he wishes, says or does- that tide just keeps on rolling.
Imagine steaming open A level results-before official opening time and realising your 3 As are actually a D and 2 C's. Well thats the expression.
Weary, worried and humbled.
We can all be very scared....cause he knows something we dont know... and he has the look of a man who does not want to break the news.
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269
It went wrong when salesmen, accountants and management consultants started to appear in positions of authority. They were almost inevitably appointed from outside the banks and above the heads of the old fashioned bankers, many of whom were made redundant in their fifties.
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Its all so ridiculous i can't stop laughing about it. Goodwin must be laughing all the way to the Bank.......Boom Boom!!!!!
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#241
Correct !!!
You got there quicker than I thought you would though.
Saves time I suppose
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All those pinning their hopes on the 'green shoots' of the RBS share price rise.
All those gains will be wiped out on Friday - as they have done for the last 6 months.
As soon as the price rises above a certain amount - more people decide to get out while they can - causing a greater fall afterwards.
No formulas, no mystical magical whizz bang science - just pure and simple human behaviour.
There has been a share price rise immediately after every Government annoucement as the market gets it's hopes up.
However this has always been followed by bigger losses as the markets work out that it's all hot air and politician talk.
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Demerge is a big word in Sir Philip Hampton's vocabulary. Existing staff can prepare for a big shake-up and most likely, new employers who have the courage to pick up the pieces.
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what's striking by its absence in all the banking mess, (as it is with retail, car industry, etc) is that the lowly taxpayer isnt benefitting in anyway from reduced prices, costs, etc.
the banks are allowed to challenge taxpayers claiming back unlawful bank charges (where a legal precedent already exists) which could leave us years to wait to get our money back!
the first bail out we were advised by our wonderful leader, was to "stimulate the inter bank lending markets"
within 2 months the bank of england revealed this was not the case at all, it was an emergency bail out, to stop the banks from total collapse. this is why the government didnt have the option to give the money to the people and let it filter through to the banks (which would have increased competition and also allowed thousands of homeowners to pay off mortgage arrears instead of losing their homes - the two birds with one stone approach)
further bailouts have again neglected to involve passing money through ordinary people, again weakening competition and causing another 40,000 to be made homeless.
for a government who talks about helping people, they are doing very little for the people.
the bailouts (which are OUR money, not "theirs" as they are keen to tell us) are not benefitting the people at all, which begs the question, they were incompetant in the extreme getting us into this mess, they seem to have forgotten about us when it comes to getting us out of it!
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This comment was removed because the moderators found it broke the House Rules.
I cannot understand all this fuss about Fred's pension.
RBS is state owned
Fred a pension
ergo Fred can start receiving a state pension when he is 65 years of age...
of course he can sue for what he believes he has coming to him............I am sure the state can draw out the procedure as it has in the past, when it does not want a resolution of an issue............
maybe when he is 65 years of age, he will gladly accept his 90.70 per week...........
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#237
So was he really that short of anything worthwhile to say that he had to waffle like that? That's Accounting 101! Unless his balance sheet didn't balance because it got beyond the wit of man to track the flows - so he hid the X-figure there? Nothing would suprise me now...
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#255 It is very difficult to mark anything to market if the market for the product has disappeared. When the products were constructed and given a triple A rating everyone that bought them knew exactly what % of the asset was of lesser quality but were prepared to buy them because of the extra interest they could earn for taking that risk. As the climate deteriorated the Investment banks that packaged up the products and sold them to their clients and made a market in them stopped offering realistic prices even though the vast majority of the underlying assets continued to meet payments. The implication is that the entire product is now in default which is nonsense. Its a bit like saying the house prices are falling and sellers cannot get anyone interested so your house is worth nothing.
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Odd, that suppression of my #191. The only person I talked about was me, and why it wasn't a good idea
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People, your country needs you!
Get all the money you can out of these failing institutions and put in The Post Office
Kill off these parasites before they take us all under.
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Don't worry -- it seems Sir Fred and the board 'kept within the rules'.
So thats all right then.
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StrongholdBarricades does it again...#218 moderated before #184 onwards!
while you are fixing this can you also fix the fact that bbc blogs won't resolve pound sterling symbol and and apostrophes!
££££££ '''''''''''''
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The flag of St Andrew is hanging limply at the base of the pole all tattered and spoiled and disgraced but the cross of NatWest blows freely in the wind.
Little Freddie Goodwin and Tommy McKillop all smiles and dribble and paunched to bursting point on stolen pocket money they nay deserved.
There old pals Little Gordy Brown and Little Ally Darling with dirty faces all grumpy and contrite left hungry and bemused and let down.
What is to be done by sensible Stevie Hester and Gordy and Ally.
Surely you must now turn to the treason-law of Edward III.
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#259. Senscommun
You wrote "This country needs a revolution".
Sadly, it may well get one - at least to some degree.
And that, also, will cause more wasted money (police / military /judicial costs, repairs to buildings / infrastruture, etc., etc.) and further social pain and harm to individuals and communities.
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What did this guy get his knighthood for exactly? Unless it was for services to charity he should be stripped of it immediately.
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150 166
If I'm daft, you must be even dafter as you did not listen to me telling you to buy RBS at 10p!
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We are going to need a whole lot of new names for boys in the future.....no one calls their kids Adolf anymore, Fred has just got stuffed and in the North East I cannot see anyone being called Robert?
£650k is that enough for all the bodyguards he is going to need when people really get to see how much their pensions have been damaged?
I suspect not.
CB
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It is a sign of the times we are in that the BBC report doesn't bother to mention that RBS's results have been improved by the change in the accounting standard IAS 39 Financial Instruments: Measurement and Recognition. Had the standard not been changed the loss would have been a little bit bigger (GBP5.3billion bigger). Minor detail.
RBS also plans to reduce or sell off its operations in 36 of the 54 countries it operates in. Just at the time it will probably get the least value for them in 50 years. Gordon Brown and gold reserves comes to mind.
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Hi Peston,
When someone is loosing blood (say from a cut on their arm) you wouldn't give a blood transfusion until you stopped the bleeding.
If a Bank is bleeding money due to toxic assets surely you should stop the bleeding before replacing the money else it will flow away with the rest of the money.
Pressure should be applied to stop the bleeding at all cost or I,m afraid the patient will die. [RIP RBS].
Comments from all Blood Donors welcome[Taxpayers]
regards Phil
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Robert
I agree with contributions 190 and 192.
Let's put an end to this tranche-by-tranche funding .. it is only making better fodder for the media of other countries around the world, who are inevitably drawn to think: "the UK are STILL not getting their problem solved!"
Thanks for both your research and unearthing and also for your trenchant presentation. The length of this response to your blog indicates that these elements are widely appreciated."
Regards
David
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the banks and their chums the government should jolly well stop raping the taxpayer because the taxpayer really doesn't like it and pretty soon he is going to stop being all cross and actually do something about it.
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There has been such a media frenzy surrounding the banking "fat cat" bonus regime and in particular Sir Fred's pension which is truly unacceptable but surely no one expects him to give it back.
Following the truly ridiculous farce of making him say sorry (a media circus), why would he care. If I was gettting that level of pension, I would apologise daily whilst dressed like Danny La Rue if that's what they wanted. Sir Fred must be bent double with laughter.
As all focus is still facing banks, should we not be turning our attention and diversifying into other areas where "over the top" salaries and potential bonuses are being paid. Perhaps you can speak to some of your colleagues in the BBC Robert, such as Mr Jonathan Ross
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Financial numpty here, so please be gentle......
It seems to me that HMG are insuring GBP350Bn of potentially bad investments on a balance sheet that includes GBP1.7Tn-worth of assets (roughly 20%? - when I was at school, trillions were way off the radar!!)
The only asset on my personal balance sheet is my house and, by all accounts, I am looking at a potential loss of around 50%
If I had been wealthy enough to purchase shares in RBS, I would be looking at a loss of around 100%
Can somone please tell me why it is necessary to insure losses of 20%, but not 50-100%??
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275. At 3:40pm on 26 Feb 2009, writingsonthewall wrote:
.....It's time to take matters into our own hands.
SEE YOU ALL ON PARLIMENT SQUARE ON 1ST MAY 2009 WHEN WE SHOO THE RATS FROM THEIR NEST.
___________________________________
SHOOT, shurely
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Hi Earthlings,
I have a cure for the problem of the Banks which you can try:
Collectively remove your deposits/savings from the bad banks and put them in other less corrupt banks. [if there is such a bank left???]
It is your right to exercise this action!
bye Earthlings I'm off to a more stable Universe!
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Re-Sir Fred Goodwin's pension and the Govt. statement that it is unable to stop it, why can they not draft a quick bill put it through Parliament probably in no more than two days since it will have all party support, allowing the new Banking watchdog to retrospectively cancel, alter, amend or in any way change the remuneration/pension package of any bank executive where the Govt has a share holding in excess of 25%. Job Done and the "obscene" greed and arrogance of these people will be brought back down to earth and the real world.
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- Deceit
- Greed
- Lies
- Corruption
- No Transparency
- Self Interest before the Needs of Others
- No Freedom of Information
- Broken Promises
- Surveillance Society
- Fiddled Expenses
- No Accountability
- No Responsibility
- Complete and Utter Mismanagement of the Economy
- Half reformed House of Lords
These are not subjects that divide political parties nor are they the preserve of any one political party; they are the seeds of revolution which unite the people of all parties.
It is not because I am a Tory supporter and you are are a New Labour supporter or a socialist (the two are not compatible) or maybe you are a Green Party supporter or perhaps a Lib Dem supporter; you might even support UKIP or the BNP or the Communist Party or the recognised Socialist Party. In a democracy, it does not matter whether there is disagreement but there are certain principles that must be upheld in order for it to work; when these principles are disregarded, anarchy will prevail.
A time is coming and it's coming closer by the day when the decent citizens of this country are going to demonstrate to our leaders and the establishment that their apalling behaviour is not acceptable anymore and that the current personnel who are tainted by this fiasco must go; just take the money and go.
It doesn't matter if it's Fred and his £650,000 a year from RBS or Tony Blair and his £700,000 a year from JP Morgan or the others thousand or so executives who are so grossly overpaid.
Just go and go quickly...
...to some tax haven where you can keep all the dosh without paying anything back to the country you stole it from because what is for sure, you did not deserve it.
Just go now.
Just leave the decent people of this country to sort out the mess on their terms, not yours.
You are not wanted anymore.
Just go.
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RE; 262 Armagediontimes
The fall of the Soviet Union was regarded as nothing but a positive thing in the rest of the world, economically it was a boon for most people. Its a totally false analogy with what would happen if the entire banking system collapses, for all of the erudite comments on here I sometimes wonder if any of you understand how finance works..
For instance I have severa times read that 'Savers outnumber borrowers seven to one' in these blogs, as justification for another rant about how the 'prudent and thrifty' are being shafted..Given that there are twelve million mortgages in this country, mostly jointly held, unless the population has increased to about 100 million without me noticing, that statement is just rubbish.
Savers and their funds constutute a tiny amount compared to the vast swathes of debt in the system, obviously, otherwise WE WOULDNT NEED TO BAIL OUT THE BANKS, how much more simple do you need it spelt out..
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#275
SEE YOU ALL ON PARLIMENT SQUARE ON 1ST MAY 2009 WHEN WE SHOO THE RATS FROM THEIR NEST.
===============================
Why wait till 1st May 2009?
Why not go for 20th April 2009 when GB is hosting his 'How I saved the world' G20 party in front of very important guests?
I can't wait to see the faces of those overseas leaders when they realise that GB is the UK's very own Wizard of Oz! Nothing more nothing less.
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Can someone check the balance sheet of GB Ltd...
I just want to ensure that the country is solvent and that its actually worth being a citizen of it.
Perhaps its time for the majority of the population to take over, set up a new country, grab what assets we can and leave debt ridden GB Ltd in the hands of the politicians and financiers.
(We'll keep the land and 95% of the population, the fools responsible for this can then have the vast wealth they've accumulated getting us into this mess to settle their debts).
Strange that people seem to think debt creates wealth; production efficiency and effective trade seem to be the only real net wealth creators, beyond that its just a case of oiling the wheels and allocating the benefits.
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APPOINTMENT FOR A DEPUTY CHIEF EXECUTIVE TO THE FSA.
The successful candidate should be a former chief executive, preferable of a bank;
He or she should be familiar with the Bank of England’s control of the financial system prior to 1997, how mortgages were sacrosanct, protected from abuse, under existing safeguards of regulations and the law.
He or she should be old enough to remember how Mortgages were only to be used for the purchase of property; loans for all other purchases had to be through a bank loan or hire purchase, which were short term and had a higher rate of interest. Lending banks and building societies were strictly regulated in order to protect homeowners’ and the security of their asset and the valuation upon which mortgage deeds depend. Lending for consumer spending on domestic and luxury goods were kept separate and how in 1997, Gordon Brown when Chancellor at the helm, decided that he didn’t like that anymore, when he introduced a system were we had, the Financial Services Authority, the Treasury, and the Bank of England, (the Tripartite Authorities) carving up the job amongst them, and the problems it created when there was a crisis, ‘apparently’ nobody knew who was in charge. The effect of all this – the system unregulated.
The successful candidate should:
be familiar with the 1997 Memorandum of Understanding between the Tripartite Authorities;
have a firm knowledge of historical changes, to deregulate the banking system in 1997, and should keep in mind who’s idea it was to change the system;
be confident in the practices of how to raise collateral by repackaging mortgages and sell them on in the form of Collateral Loan Obligations (CLOs) and other similar stealth products. How to trade them through institutions, that operate outside strict bank regulations, thus enabling our colleagues in the banking industry to make a fortune;
Know how to creating all kinds of similar stealth instruments to siphon off taxpayers, homeowners money and assets;
know how to turn a blind eye to unscrupulous banks who know how to get round regulations;
have experience in gagging and sacking any whistle blower;
know how to increase mortgage interest rates and to claw back homeowners assets at repossessed prices;
know how to induce a credit squeeze by blocking the money supply to homeowners and to the business and commercial sector to enable the government to swop mortgages at repossessed prices for bonds which is really taxpayers money and how to pay back the taxpayer by way of quantitative easing, which is really confetti money printed by Funny Toy Currency;
Know how to withhold interest rate cuts from the Bank of England to off set the penalty interest rates imposed by the BOE;
The successful candidate may be subjected to a grilling before a Treasury Committee, this could result in the candidate receiving a slap over the wrist for his greedy and unscrupulous behaviour. The successful candidate should know how not to get caught;
Only those candidates who suffer from megalomania and can answer the following questions will be short listed.
1. In 1997 who’s idea was it to change the system? was it Gordon Brown's idea, or the Bankers' idea, or both? Who persuaded who?
2. How would you respond to a grilling by the Treasury Committee?
a) would you respond with rhetoric which is vague nebulous guff and blind the examining MP with financial jargon masked in acronyms.
b) what is the acronym JSA.
On appointment the successful candidate will receive a Knighthood to keep the lid on any improper practices that may arise either in the FSA and any bank or financial institution. Should any impropriety of any kind arise, his loyalty shall insure he don’t not spill the beans, even after he retires;
To advise the Prime Minister on how to
Terms and Conditions of employment.
His salary will be £1million per year, with, of course, the usual bonuses’ in excess of the standard rate of ten times one’s salary, plus further expenses’. In addition he will be entitled to a collection of cars which includes Ferraris, a classic Triumph Stag and, of course, a Rolls Royce. He will have the use of a jet which costs £9,000 an hour to run.
He shall be entitled to a lump sum of £4million should he leave the company or is sacked, plus a pension of £650,000 per year for life.
He will, of course, delegate his work to other assistants. This will allow more time for him to play golf and have other directorships and interests.
His appointment and bonuses will, of course, be rubber stamped and approval by Lord Myners. But the Government will not find out about it until after the next election.
Qualifications:
The successful candidate should:
be knowledgeable in not what he knows, but in who he knows;
have no formal banking qualifications;
be no novice.
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Let's get a number of things clear. We don't own RBS neither are we as "Taxpayers" liable for its massive losses.
The State is responsible for bailing out RBS but as a "Taxpayer" my taxes cease to be my assets when I pay them and I am no more entitled to the break up assets of the State as I am responsible for its liabilities.
I and many others would love to wind up GB PLC and take a share of its assets but of course this is mere fantasy.
Of course if it (the State) makes poor decisions like invading Iraq or allowing its regulator (the FSA) to do an appallingly bad job in regulating the Banks it runs up debt and I have to pay more taxes. The Government and Media are however equally responsible in misleading the public by attaching the label of "Taxpayer's money" to any State expenditure caused by its failures.
Turning to Sir Fred. Yes with hindsight the Corporate decisions made by the RBS Board and its millions of Shareholders turned out to be "Merde" but let's not make one man a scapegoat for those Corporate decisions.
Directing the full force of a media frenzy and Government blame diversion against one man is sickening. We are all culpable for the state we're in even if we're not personally liable as taxpayers as you and other commentators wrongly suggest.
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Like the rest of you, I am gob-smacked. It is obscene that HMG and RBS did this deal with Mr Goodwin. Why was he not sacked for gross misconduct? Incompetence on this scale is misconduct - you don't need to be an employment law genius to work that one out. And having done this deal with Mr Goodwin, how can anyone involved in it at HMG and RBS not also be sacked for gross misconduct? If this was an NHS Trust CEO (eg Rose Gibb - and I hold no torch for her) then the Govt would order it not to pay regardless of any advice that there was a watertight agreement.
There's something rotten in Denmark. It stinks.
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It's not true that nothing can be done about the massive increase to the pension authorised by the directors. All the directors responsible can be sued (and hopefully bankrupted) as, knowing the state of affairs at RBS they were in breach of their fiduciary duty to the company when they voted money to Sir Fred Goodwin, when it was not contractually neccessary to do so.
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Robert I do wish you would stop talking about "foolish" and "reckless" lending as if at the point the loan was made it was known to be reckless. Clearly there have been mistakes in US Mortgage assets and certain highly leveraged corporate and real estate lending, but many of the lending that is now getting into trouble is because of the Global recession, e.g. Woolworths or because we the public took out loans we couldn't pay. You can't pin it all on the banks - if we're not buying CDs from Woollies, they go under and their loans will go bad and the banks will have a loss - its not all their fault, much as the public and idiot MPs such as McFall (never had a business job in his life) like to have someone to blame
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oh dear, it seems I'm going to have to take the slightly dicey step of defending people & positions
Firstly, the moderators. So many contributors seem to enjoy bashing them, the time it takes etc. May I just ask how many of these poor souls do you think there are? If there were an army of them sitting waiting just to read your comments, no doubt we'd soon be seeing a wave of rage targeted against 'typical BBC overmanning'.
Get real - this is a discussion forum, not the guys who answer 999 calls.
Next, can't believe I'm going to do this but I'm going to defend Fred Godwin, or at least his pension. Looking at his letter, it strongly implies that a chunk of it was transferred into the RBS scheme when he joined in 1998, so isn't just all a freebie. Also at the end of the day, the effort to get it back isn't likely to be financially worth it, and its seems to be strongly implied that Govt Ministers knew about it, and accepted it.
Any politician calling for it to be refunded should bear in mind that their pensions are equally gold plated! Perhaps I'd change my mind if we were allowed to withold their pension payments if later its deemed they'd run the country down.......
As I'm sure I'm not going to get any support on the above, I'm going to head into my bunker.
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Will somebody please confirm to me the location of all this toxic waste. If as I believe, it is mostly to be found outside the UK, why on earth is the UK tax payer having to provide insurance, etc. etc. Surely it would be better to let the banks go bust (like any other wrotten business) and start afresh with those 'sensible' banks taking the lead.
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No matter RBS and Fred has anyone calculated how much Gordon Brown has cost the country.
I wonder if Brown will return his pension.
No place to hide Gordy, the end is nigh!
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Lets put Fred's £625k annual pension in to perspective. If you are on the UK national average wage then you will have to work for about 25 years to earn what Fred now earns in 1 year for doing Sweet FA. Fred sits at home with his feet up for 12 months you put in about 1762.5 hours work (if you work 37.5 hours a week). If Fred lives until 78 (about average for UK males) he will draw £17,500,000. Fred will also qualify for his state pension at age 64 and heating allowance at 60 as well as a free bus pass.
Sort it out Gordon!!
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At this rate, how many debted consumers could we have bailed out and in turn revived the economy! Lets bail out the consumers and not the banks as I think at this point of deterioation in the economy, its consumer confidence and spending power that will revive the economy, not the banks and their ability to lend to households as many households do not have the appetite for more debt! But then again, what would I know, I am only an ordinary UK taxpayer...
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The size of the bank bail-out is extraordinary and, therefore, worrying but I would remind all of you of a little ditty from the early 70s relating to the Conservative's nationalisation of Rolls Royce.
It went:
"The people's flag is deepest blue
We're buying up Rolls Royce for you
But when the profits rise well then
We'll flog the beggars back again"
And happily it turnedout to be a "forecast". The same thing will probably happen with the failed banks.
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If 'Fred the Shred' was required to spend, not save, all his £650,000 locally each year, we should benefit from his tax contributions and his locality would benefit from his spending. That would really be putting something back into the community over time. The trouble is that spending £7500 a week could turn into a quite a problem of its own.
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Any discretionary payment, such as a payment to the pension scheme to allow early retirement, known as a 'deficiency cost' has to be sanctioned, e.g. by the Finance Director. Money changes hands from the Company to the pension trustees. In Fred the Shred's case it would have been about £8m.
Anyone exercising financial supervision would know this.
Anyway I hear that Fred the Shred will be returning just under 40% of his pension to the Government. No option here really, it's called income tax.
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More a question than a comment........
I have recently commenced day trading and up until today (Friday 27th Feb) was doing reasonably well. I have purchased shares in both RBS and LLOYDS due to the potential value I see in them. The question is if both companies were nationalised what would happen to those shares?
Many thanks.
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Wilmott laughs at the government's ineptitude in the world of finance with one telling phrase:
"Note to Lord Myners, Alistair Darling and Gordon Brown: When you buy insurance on company X, buy it from company Y, not company X itself."
Why is that pertinent? Because "a fall of a mere 8.2% in the value of the toxic assets will wipe out the £6.5 billion. And that's best-case scenario in which the RBS share price doesn't fall!"
Read the full blog post at:
http://www.wilmott.com/blogs/paul/index.cfm/2009/2/28/The-Mother-Of-All-CDOs
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Robert
There are a couple of phrases you use which give a spin. You call RBS a "pillar of the economy" leading to an implication that national interest gives us no other choices other than to bail-out this over leveraged busted flush in this way. Also, if this is "insurance" in the commercial sense the insurer never takes an unquantified risk. He quantifies the risk prospect, takes an excess and premium based on disclosures by the insured person and the chance of the insured event happening. Who has done this excercise for the taxpayer, where can we see the figures. Without this information, why shouldnt we just conclude this is no more than a panicky guarantee to prop up a balance sheet of a favoured bank. The people deserve to be given the full picure and given the information that all other options have been evaluated and discounted for good reasons.
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I think that the Government should call Sir Fred Goodwin's bluff - refuse to pay him and let him sue!
Failing that - here is another option.
There is one obvious solution to this - Sir Fred Goodwin's pension should be clawed back by TAXING HIM AT 100%.
He should also be made to live on the State Pension level of money which all Senior Citizens have to live on, many of whom were sent to the wall and driven into bankruptcy by the RBS and their over-selling of 'Consolidation Loans' under the misnomer or 'Financial Reviews'. All the 'Financial Advisors' work on commission - the more they sell the more they get paid. The lower levels of bank employees need to be paid a fair salary so that they don't have to rely on commission.
The BANKS and their greedy, unethical policies drove the UK into this financial mess whilst government ministers looked on and let it happen - they had been warned long before it happened!
All it takes for evil to succeed is that 'good' men look on and do nothing!
It is time for the Government to realise that this is not THEIR money with which they are playing - it is OURS !
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More bailouts? Sorry but this is plain wrong, how much of our money has been squandered on our banks to date?
Probably equal to everyones mortgage, or at least 100k to all mortgage holders, imagine the effect on the economy... a lot faster than giving it to the banks for sure.
You are not asking the right questions Robert, you put spin on certain phrases, this is not good, especially if you want people to take you seriously.
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